Which of the Following Will Not Increase Your Liquidity Ratio

question 16

Multiple Choice

Which of the following will not increase your liquidity ratio?

• A)Purchasing a stereo on credit
• B)Paying off a credit card
• C)Selling stock for a gain
• D)More data needed

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Definitions:

FIFO

First-In, First-Out, an inventory valuation method where goods first bought are the first to be sold, assuming that the oldest inventory items are sold before newer ones.

Costs

The amount of money expended or resources used in the production of goods or in providing services.

Average Cost Method

An inventory valuation method wherein the cost of goods sold and ending inventory is determined by taking the weighted average of all purchases.

Periodic Inventory System

An inventory accounting system where updates to the inventory accounts occur at specific intervals, such as monthly or yearly, as opposed to continuously.