Assume a Company Has a Current Ratio of 2

question 82

Multiple Choice

Assume a company has a current ratio of 2. Payment of accrued wages payable would cause the current ratio to

• A)decrease.
• B)increase.
• C)be unchanged since the effects offset one another.
• D)be unchanged since it has no impact on any current asset or liability accounts.

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Definitions:

Profits

Profits represent the financial benefit that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.

Penalty

A penalty applied for violating a regulation, agreement, or statute.

Financial Statements

Financial statements are formal records of the financial activities and position of a business, person, or other entity, providing an overview of a financial situation over a specified period.

Independent Public Accountant

A licensed professional who performs audits and provides financial analysis and advice without being affiliated with the audited entity.