Multiple choice

1) Another name for the acid test ratio is the

A. current ratio

B. quick ratio

C. inventory turnover ratio

D. average collection period

2) The accounting rate of return on stockholders’ investments is measured by

A. return on assets

B. return on equity

C. operating income return on investment

D. realized rate of inflation

3) If you are an investor, which of the following would you prefer?

A. Earnings on funds invested compound annually

B. Earnings on funds invested compound daily

C. Earnings on funds invested would compound monthly

D. Earnings on funds invested would compound quarterly

4) The primary purpose of a cash budget is to

A. determine the level of investment in current and fixed assets

B. determine accounts payable

C. provide a detailed plan of future cash flows

D. determine the estimated income tax for the year