Which of the Following Actions Will Cause an Increase in the Quick

question 65

Multiple Choice

Which of the following actions will cause an increase in the quick ratio in the short run?

• A) $1,000 worth of inventory is sold,and an account receivable is created.The receivable exceeds the inventory by the amount of profit on the sale,which is added to retained earnings.
• B) A small subsidiary which was acquired for $100,000 two years ago and which was generating profits at the rate of 10 percent is sold for $100,000 cash.(Average company profits are 15 percent of assets. )
• C) Marketable securities are sold at cost.
• D) All of the above.
• E) Answers a and b above.

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Definitions:

Capital Balance

The total amount of capital contributed by investors or owners plus retained earnings or minus losses.

Income Distribution

The way total income is shared among individuals or groups within an economy or organization.

Net Income

A company's total earnings or profit; calculated as revenues minus expenses, taxes, and the cost of goods sold.

Personal Use

Utilization of property or goods in a manner primarily for the individual's own consumption, enjoyment, or benefit, rather than for business or commercial purposes.