As of December 31,Year 1,Gant Corporation Had a Current Ratio

question 78

Multiple Choice

As of December 31,Year 1,Gant Corporation had a current ratio of 1.29,quick ratio of 1.05,and working capital of $18,000.The company uses a perpetual inventory system and sells merchandise for more than it cost.On January 1,Year 2,Gant paid $3,600 on accounts payable.Which of the following statements is incorrect?

• A) Gant's quick ratio will increase and its current ratio will decrease.
• B) Gant's quick ratio will increase.
• C) Gant's working capital will remain the same.
• D) Gant's current ratio will increase.

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Definitions:

Cash Paid

The total amount of money paid by a business or individual for goods, services, debts, or other financial obligations during a specific period.

Service Company

A business that provides intangible products or services to customers rather than physical goods.

Labor Costs

Labor costs refer to the total expenses related to compensating employees, including wages, benefits, and taxes, incurred by a business.

Staff Turnover

The turnover rate of employees in a company, signifying the speed at which staff members depart and are subsequently replaced by new hires.