Assume the Current Ratio Is 3 to 1

question 68

Multiple Choice

Assume the current ratio is 3 to 1. Estimating the warranties expense on the period's sales would cause the current ratio to

• A) be unchanged since it has no effect on any current accounts.
• B) be unchanged since the effects offset one another.
• C) decrease.
• D) increase.

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Definitions:

Socially Responsible Behavior

Describes actions by individuals or organizations that benefit society at large, often going beyond legal or financial obligations.

Business Firm

An organization engaged in commercial, industrial, or professional activities, either for profit or not-for-profit.

Profit Maximization

The process or strategy of adjusting a firm's operations, sales, and costs to achieve the highest possible profit.

Social Responsibility

The duty of entities, both individuals and organizations, to act in the best interests of society at large.