If Equal Amounts Are Added to the Numerator and the Denominator

question 141

Multiple Choice

If equal amounts are added to the numerator and the denominator of the current ratio the ratio will always

• A) increase.
• B) decrease.
• C) stay the same.
• D) equal zero.

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Definitions:

Impairment Losses

Financial losses recognized when the carrying amount of an asset exceeds its recoverable amount, leading to a downward adjustment in its valuation.

Pooling Of Interests

An accounting method used in business combinations where the assets and liabilities of the companies involved are combined using book values, rather than adjusting to fair market value.

Controlling Interest

Controlling interest is a condition when an individual or group holds a majority of a company's share capital, granting them significant influence or control over its operations.

Combine

To combine means to bring two or more elements together to form a whole, often used in the context of amalgamating companies, data sets, or processes.