A Firm Has a Current Ratio Greater Than 1 $\begin{array} { l l l } & { \quad\quad\underline{\text { Net income} } } &\quad\quad \underline{\text { Current ratio} } \\\end{array}$

question 36

Multiple Choice

A firm has a current ratio greater than 1.0. If the firm's ending inventory is understated by $3,000 and beginning inventory is overstated by $5,000, the firm's net income and current ratio will be: $\begin{array} { l l l } & { \quad\quad\underline{\text { Net income} } } &\quad\quad \underline{\text { Current ratio} } \\\end{array}$
A. $\begin{array} { l l l } & \text { understated by } \$ 2,000 & \text { too low } \\\end{array}$
B. $\begin{array} { l l l } & \text { overstated by } \$ 2,000 &\quad \text { too low } \\\end{array}$
C. $\begin{array} { l l l } & \text { understated by } \$ 8,000 & \text { too low } \\\end{array}$
D. $\begin{array} { l l l } & \text { understated by } \$ 8,000 & \text { too high }\end{array}$

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Definitions:

Diameter

A straight line passing from side to side through the center of a body or figure, especially a circle or sphere.

Gauge

A measure of the thickness or size of various items, like wire or body piercing jewelry, or a device for measurement.

Measurable Dose

A quantity of a substance, especially a medicine, that can be accurately measured and is suitable for administration.

10-mL Syringe

A syringe that can hold up to 10 milliliters of fluid, often used for medical injections or to measure medications accurately.