Assume a Company Has a Current Ratio of 0

question 62

Multiple Choice

Assume a company has a current ratio of 0.75. The purchase of inventory on account would cause the current ratio to

• A)decrease.
• B)increase.
• C)be unchanged since the effects offset one another.
• D)be unchanged since it has no impact on any current asset or liability accounts.

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Definitions:

Complicate

To make something more difficult or complex, often by adding new elements or problems.

Mopane Worm

A caterpillar in Southern Africa that is harvested for food, known scientifically as Gonimbrasia belina.

Generalization

The process in a learning context where a response is elicited by stimuli similar to the original stimulus.

Facilitate

To make an action or process easier by providing assistance or reducing obstacles.