Which of the Following Transactions Increases Both the Quick and Current

question 100

Multiple Choice

Which of the following transactions increases both the quick and current ratios assuming that both ratios are greater than 1?

• A) Collecting an account receivable.
• B) Purchasing inventory on account.
• C)Accruing revenue earned at year-end.
• D)Selling inventory on account at the cost of the inventory.

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Definitions:

Implied Warranty

An unwritten guarantee that the product will meet a minimum level of quality implying that it is fit for sale as intended.

Disclaim

To refuse a right or renounce a claim to something, often as a legal declaration.

Fitness for a Particular Purpose

A legal doctrine that implies a seller's promise that the goods sold will suit the specific purpose for which the buyer intends to use them.

Implied Warranty

A legal concept that assumes a product will meet certain standards of quality and reliability without being explicitly stated.