Assume the Current Ratio Is 3 to 4

question 127

Multiple Choice

Assume the current ratio is 3 to 4. Purchases of inventory on account would cause the current ratio to

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

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Definitions:

Northern States

Referring to states located in the northern part of a country, often used in the context of the United States during the Civil War era, which were opposed to slavery.

Major Issues

Significant problems or debates that are of widespread concern within a society or political system.

Repayment of Debts

The process of paying back money borrowed from lenders, which can involve regular payments of principal and interest over a specified period.

Foreign Trade

The exchange of goods and services across international borders or territories, influencing a country's economy.