Assume a Company Has a Current Ratio of 0

question 62

Multiple Choice

Assume a company has a current ratio of 0.75. The purchase of inventory on account 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:

Polyunsaturated Fats

Fatty acids that contain more than one unsaturated carbon bond, considered healthier fats and found in foods like fish and nuts.

Trans Fat

A type of unhealthy fat formed through the industrial process of adding hydrogen to vegetable oil, which can raise bad cholesterol levels and increase heart disease risk.

Unsaturated Fats

A type of dietary fat, found in foods like avocados, nuts, and olive oil, that is considered healthier than saturated fats.

Saturated Fats

Types of fats commonly found in animal products and some plant oils, known to raise levels of LDL cholesterol in the blood, potentially increasing heart disease risk.