Differentiae the acid-test ratio and the current ratio

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Reference no: EM131532924

Question: 1. Identify similarities and differences between the acid-test ratio and the current ratio. Compare and describe how the two ratios reflect a company's ability to meet its current obligations.

2. Business decision makers desire information on sales returns and allowances.

(1) Explain why a company's manager wants the accounting system to record customers' returns of unsatisfactory goods in the Sales Returns and Allowances account instead of the Sales account.

(2) Explain whether this information would be useful for external decision makers.

Reference no: EM131532924

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