Which of the Following Would Improve a Current Ratio That

question 42

Multiple Choice

Which of the following would improve a current ratio that is now 1.2?

• A)Selling long-term assets for cash.
• B)Purchasing land for cash.
• C)Buying equipment in exchange for a two-year note.
• D)Purchasing inventory on account.

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Definitions:

Budgeted Costs

Estimated expenses planned in advance for a specific period, often used as targets or benchmarks for actual performance.

Direct Materials Purchase Budget

A budget estimating the raw materials that need to be purchased to meet projected production demands.

Ending Inventories

The final quantity and value of materials, work-in-process, and finished goods that a company holds at the end of an accounting period.

Direct Labor Budget

A projection of the total costs associated with the direct labor needed for a specific period, based on projected levels of production or services.