Unexpected or Inconsistent Movements Among Sales,merchandise Inventory,and Receivables Reflect Normal

question 25

True/False

Unexpected or inconsistent movements among sales,merchandise inventory,and receivables reflect normal market conditions and do not pose red flags in financial statements.

Compute and understand the significance of the current ratio and working capital.

Recognize the proper classification of sales taxes collected by a retailer.

Understand the process of accounting for insurance premiums and their impact on financial statements.

Calculate sales taxes owed to the taxing agency based on total sales.

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Definitions:

Quick Ratio

The quick ratio, also known as the acid-test ratio, is a measure of a company's ability to meet its short-term obligations with its most liquid assets.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its current assets.

Inventory

The goods and materials a business holds for the ultimate goal of resale or utilization in production.

Quick Ratio

A liquidity ratio measuring a company's ability to meet short-term obligations with its most liquid assets, excluding inventories.