Assuming a Current Ratio of 1

question 92

Multiple Choice

Assuming a current ratio of 1.0 and an acid-test ratio of 0.75,how will the purchase of inventory with cash affect each ratio?

• A)Increase the current ratio and increase the acid-test ratio.
• B)No change to the current ratio and decrease the acid-test ratio.
• C)Decrease the current ratio and decrease the acid-test ratio.
• D)Increase the current ratio and decrease the acid-test ratio.

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Definitions:

Consistent

Showing steady and uniform characteristics or behavior over a period of time, lacking any significant variation.

Reliable

The extent to which an assessment tool produces consistent and stable results over multiple applications or time periods.

Standardized

The process of making something conform to a standard in order to ensure consistency and comparability.

Norms

Shared expectations or rules within a society or group about how members should behave.