If the Current Ratio Is Currently Greater Than 1

question 69

Multiple Choice

If the current ratio is currently greater than 1.0, which one of the following events would increase the current ratio?

• A) Purchase of inventory on account
• B) Receipt of money from a customer prior to the performance of service
• C) Warranty expense is accrued
• D) Sale of plant asset at a gain

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Definitions:

Piecework Pay Plans

Compensation schemes where workers are paid based on the quantity of items they produce or complete, rewarding productivity and output.

Labour Costs

The total expenditure by employers for the compensation of employees, including wages, benefits, and other related expenses.

Lump-sum Merit

A one-time merit payment awarded to an employee instead of a permanent salary increase.

Base Salaries

The initial rate of compensation given to an employee, not including any extra benefits, bonuses, or raises, which serves as a foundational income.