Zack Company Has a Current Ratio of 2

question 221

Short Answer

Zack Company has a current ratio of 2.5.What will be the effect of a purchase of inventory with cash on the acid-test ratio and on working capital? $\begin{array}{cc}&\text { Acid-Test Ratio } & \text { Working Capita } \\A)&\text { decrease } & \text { decrease } \\B)&\text { decrease } & \text { no effect } \\C)&\text { no effect } & \text { decrease } \\D)&\text { no effect } & \text { no effect }\end{array}$

• A)&\text { decrease } & \text { decrease } \\
• B)&\text { decrease } & \text { no effect } \\
• C)&\text { no effect } & \text { decrease } \\
• D)&\text { no effect } & \text { no effect }
• \end{array}\)

---

Definitions:

Glucose

A fundamental sugar, vital for energy provision in living creatures and incorporated in a wide range of carbohydrate structures.

Patella

The kneecap; a small flat triangular bone located in front of the knee joint.

Hyoid

A U-shaped bone in the neck that supports the tongue and is associated with swallowing.

Scapula

A flat triangular bone located in the upper back that connects the humerus (upper arm bone) with the clavicle (collar bone).