Why is the quick ratio considered by some to be a better measure of liquidity than the current ratio?
A) The quick ratio more accurately reflects a firm's profitability.
B) It omits the least liquid current asset from the numerator of the ratio.
C) The current ratio does not include accounts receivable.
D) It measures how "quickly" cash flows through the firm.
Ans: B) It omits the least liquid current asset from the numerator of the ratio.
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On February 13, Year 2, Fox, CPA, met with the audit committee of the Gem Corporation to review the draft of Fox's reports on the company's financial statements as of and for the year ended December 31, Year 1. On February 16, Year 2, Fox completed all remaining field work and obtained sufficient appropriate evidence to support the opinion on the financial statements. On February 28, Year 2, the final report was mailed to Gem's audit committee. What date most likely would be used on Fox's report?
a. December 31, Year 1. b. February 13, Year 2. c. February 16, Year 2. d. February 28, Year 2.