AIndicate the Effect of a Sale of Merchandise on Account $$\begin{array} {| l| r |} \hlineCurient~ Iatio&\\\hline Quick ~Iatio\\\hline Inventory~ tumover\\\hline Asset~ turnover\\\hline\end{array}$$

question 105

Essay

a.Indicate the effect of a sale of merchandise on account (on credit)on each of the following items.Assume the selling price exceeds the cost of the inventory.Use "Increase," "Decrease," or "No effect" to express your answer for each,and place your answers in the spaces provided.
$$\begin{array} {| l| r |} \hlineCurient~ Iatio&\\\hline Quick ~Iatio\\\hline Inventory~ tumover\\\hline Asset~ turnover\\\hline\end{array}$$
b. Indicate the effect of a payment of an account payable on each of the following items. Assume that the first two ratios exceeded 1.0 before the transaction. Use "Increase," "Decrease," or "No effect" to express your answer for each, and place your answers in the spaces provided.
$$\begin{array} {| l| r |} \hline Curint ~ratio&\\\hline Quick ~ratio\\\hline Return ~an~ equity\\\hline Receivable ~turnover\\\hline\end{array}$$

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Definitions:

Price Floor

A government-imposed minimum price for goods or services, intended to prevent prices from falling below a certain level.

Market-clearing Price

The price at which the quantity demanded by buyers equals the quantity supplied by sellers, eliminating any surplus or shortage in the market.

Surplus

The condition in which the quantity of a good or service supplied exceeds the quantity demanded at the current price.

Foreign Currency

Currency used in a country other than one's own, involved in international trade, investments, and travel.