If a Company Converted a Short-Term Note Payable into a Long-Term

question 90

Multiple Choice

If a company converted a short-term note payable into a long-term note payable,this transaction would:

• A) decrease only working capital.
• B) decrease both working capital and the current ratio.
• C) increase only working capital.
• D) increase both working capital and the current ratio.
• E) have no effect on either the current ratio or net working capital.

Understand the application of perpetual and periodic inventory systems.

Calculate inventory turnover and interpret its significance.

Derive cost of goods sold using various inventory methods.

Analyze the impact of inventory valuation choices on financial ratios and business decisions.

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