Question Details

What does the current ratio inform you about a company



1.	What condition(s) is/are necessary to recognize an asset retirement obligation?
a.	Company has an existing legal obligation and can reasonably estimate the amount of the liability.
b.	Company can reasonably estimate the amount of the liability.
c.	Company has an existing legal obligation.
d.	Obligation event has occurred.

	2.	Which of the following is not a factor that is considered when evaluating whether or not to record a liability for pending litigation?
a.	Time period in which the underlying cause of action occurred.
b.	The type of litigation involved.
c.	The probability of an unfavorable outcome.
d.	The ability to make a reasonable estimate of the amount of the loss.

	3.	How do you determine the acid-test ratio?
a.	The sum of cash and short-term investments divided by short-term debt.
b.	Current assets divided by current liabilities.
c.	Current assets divided by short-term debt.
d.	The sum of cash, short-term investments and net receivables divided by current liabilities.

	4.	What does the current ratio inform you about a company?
a.	The extent of slow-moving inventories.
b.	The efficient use of assets.
c.	The company's liquidity.
d.	The company's profitability.

	5.	Which of the following is not an acceptable treatment for the presentation of current liabilities?
a.	Listing current liabilities in order of maturity
b.	Listing current liabilities according to amount
c.	Offsetting current liabilities against assets that are to be applied to their liquidation
d.	Showing current liabilities immediately below current assets to obtain a presentation of working capital





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