Use the Information Below to Answer the Following Questions

question 11

Multiple Choice

Use the information below to answer the following questions:
Unstable Ltd has decided to change its depreciation method from straight-line to reducing balance, with the agreement of its auditors and taxation authorities. As a result, its annual depreciation expense increases by $200,000. The company’s income tax rate is 40%.
-Which of the following could explain a decrease in the quick ratio?

• A) a change from FIFO to LIFO
• B) a change in the depreciation method used
• C) slow-moving inventory
• D) increase in accounts payable

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Definitions:

Statement Of Income

A financial document that outlines a company's revenues, expenses, and net income over a specific period, providing insight into financial performance.

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including materials and labor.

Gross Profit

The profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services.

Single-Step

A simplified method used in income statement preparation that aggregates all revenues and subtracts all expenses to calculate net income.