Assume That a Company Has a Current Ratio of 3

question 32

Multiple Choice

Assume that a company has a current ratio of 3. Failure to record estimated warranty costs will cause the current ratio to be

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

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Definitions:

Prison Sentence

The period of time a person is legally required to spend in prison as punishment for committing a crime.

Public Defender

A lawyer appointed by the court to represent defendants who cannot afford to hire a private attorney in criminal cases.

Deemed Reasonable

Considered or judged to be fair, appropriate, or within acceptable limits according to prevailing standards or circumstances.

Act of Omission

A failure to perform an act or duty that one is obligated to do by law or promise.