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Learning Objective 8-5 1) The acid-test ratio also known as the

Question : Learning Objective 8-5 1) The acid-test ratio also known as the : 1412218

 

Learning Objective 8-5

 

1) The acid-test ratio is also known as the quick ratio.

 

2) The higher the quick ratio, the lower the business's ability to pay its current liabilities.

3) The amount of Accounts Receivable is generally reported at its gross amount on the balance sheet.

 

4) The acid-test ratio is a more stringent measure of liquidity than the cash ratio.

 

5) Days' sales in receivables is also known as the collection period.

 

6) An acid-test ratio of 1.0 is considered safer than a ratio of 0.50.

 

7) The days' sales in receivables ratio indicates the number of days it takes to collect the average level of accounts receivable.

 

8) The accounts receivable turnover ratio indicates whether a company could pay all its current liabilities if they were to become due immediately.

 

9) The number of times a company collects the average accounts receivable balance in a year is known as the accounts receivable turnover ratio.

10) Barker Sales has a days' sales in receivables figure of 35 and Xanadu Company has a days' sales in receivables of 25. This would suggest that Xanadu is having greater difficulty collecting their accounts receivable than Barker.

 

 

 

 

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