Match the term with its definition.

Question

A. An accounting method of recording profits when earned and expenses when incurred, whether or not the profits have been received in cash or the expenses paid
B. An accounting method of recording profits when cash is received and recording expenses when they are paid
C.
D. A firm's income statement, balance sheets, and cash flow statements
E. The degree to which a firm has working capital available to meet maturing debt obligations
F. A measure of how well a firm is controlling its cost of goods sold and operating expenses relative to sales, determined by dividing operating profits by sales
G. A measure of a firm's profitability relative to the amount of its assets, determined by dividing operating profits by total assets
H. A measure of the rate of return that owners receive on their equity investment, calculated by dividing net profits by owners' equity

Answer 1

A. Accrual-basis accounting
B. Cash-basis accounting
C. Current ratio
D. Financial statements
E. Liquidity
F. Operating profit margin
G. Return on assets
H. Return on equity