Which of the Following Correctly Reflects the Effects on the Financial

question 8

Multiple Choice

Which of the following correctly reflects the effects on the financial statements caused by the increase in market price of a current investment in equity securities?

• A)Current ratio and earnings per share decrease.
• B)Current ratio and earnings per share increase.
• C)Current ratio is unchanged but earnings per share decrease.
• D)Current ratio decreases and earnings per share are unchanged.

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Definitions:

Product

Any item or service offered to the market for consumption, use, or acquisition.

Merchandise Inventory

Goods that a company holds for the purpose of selling to customers in the ordinary course of business.

Monthly Depreciation

The portion of a fixed asset's cost allocated as an expense over a single month, reflecting the asset's decrease in value over time.

Accounts Payable

Accounts Payable is the amount of money owed by a business to its suppliers or creditors for goods and services purchased on credit.