# Accounting

## What are Liabilities in Accounting? What are liabilities in accounting? We likely all are familiar with liabilities in our personal life. Debts such as mortgages or car loans are example of common personal liabilities that individuals routinely pay. However, what are liabilities in terms of accounting. Let’s get into it below. Accounting Liabilities Liabilities in accounting are debts that are …

## A List of Liquid Assets: What are Liquid Assets? What are liquid assets? Before we get to the list of liquid assets, let us explain what they are in general. Liquid assets are assets that can quickly be converted to cash without a meaningful reduction in the asset’s value upon liquidation. It is important for businesses and individuals to have liquid assets to meet …

## What is the Cash Ratio? What is the cash ratio? The cash ratio helps determine a company’s ability to pay its short-term liabilities with its most liquid assets that consist of cash and cash equivalents. I think most readers are clear on the definition of cash. However, cash equivalents probably needs some explaining. These are current assets that can quickly …

## What is the Acid Test Ratio? What is the acid test ratio? The acid test ratio is also know as the quick ratio. It helps present a picture of a company’s short-term liquidity. Essentially, it determines how well a  company can promptly meet its short-term liabilities with its most liquid assets. You will notice that the formula to calculate the ratio …

## What is the Formula for the Current Ratio? What is the formula for current ratio? The current ratio evaluates if a firm can pay its short-term liabilities with its current assets. To calculate the current ratio you take the current assets divided by the current liabilities. The below formula shows how the current ratio is calculated. Current Ratio = Total Current Assets ÷ …

## Difference Between Accounts Payable and Accounts Receivable What is the difference between accounts payable and accounts receivable? Accounting students or individuals first learning accounting on their own commonly get tripped up by the difference between accounts payable and accounts receivable. Hopefully the information below can clear up the difference between the two accounts. Let’s dig into the topic. Accounts Payable Accounts payable …