Which of the Following Transactions Increase Both the Quick Ratio

question 96

Multiple Choice

Which of the following transactions increase both the quick ratio and the current ratio assuming that both ratios are greater than 1?

• A)Collecting an account receivable.
• B)Purchasing inventory on account.
• C)Accruing revenue earned at year-end.
• D)Selling inventory on account at the cost of the inventory.

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Definitions:

Units

Units refer to the individual components or quantities of a product, investment, or other items that are counted or measured.

Month

A unit of time, roughly based on the period of the Moon's orbit around Earth, traditionally used to measure durations of approximately 30 days.

Break Even

The point at which total costs and total revenue are equal, resulting in no net loss or gain.

Variable Cost

Costs that vary directly with the level of production or sales volume, such as materials and labor.