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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

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BuyFindarrow_forward

Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

The ratio determined by dividing total current assests by total current liabilities is:
A. The current ratio
B- The working cpita1 ratio
C. The bankers’ ration
D. AU of the above

To determine

Concept Introduction:

Current Ratio:

Current Ratio is the measure of the company's ability to pay off its current liabilities using its current assets. It is calculated by dividing the total current assets by total current liabilities. The formula of the current ratio is as follows:

  Current Ratio=Current assetsCurrent liabilities

To Choose:

The ratio determined by dividing total current assets by total current liabilities.

Explanation

Explanation for correct answer:

The ratio determined by dividing total current assets by total current liabilities is Current Ratio. Hence, the correct option is A.

Explanation for incorrect answers:

B. The ratio determined by dividing total current assets by total current liabilities is Current Ratio...

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