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:

Seed Crop Cultivation

The agricultural process of growing plants specifically for the production of seeds for planting, food, or oil.

Stress Lines

Physical or metaphorical lines indicating areas of tension or potential failure, often used in reference to geological faults or to describe points of contention within societies.

Food Production

The creation and processing of products derived from agriculture, livestock, or aquaculture intended for human consumption.

Subsistence

The means by which an individual or group maintains basic living conditions, often pertaining to the self-provisioning of food and resources.