If a Company Has a Current Ratio of 2 to 1,and

question 30

Multiple Choice

If a company has a current ratio of 2 to 1,and purchases inventory on credit,what will this do to its current ratio?

• A)Increase the current ratio.
• B)Decrease the current ratio.
• C)Does not change the current ratio.
• D)Cannot be determined.

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Definitions:

Fiscal Year-End

The end of a 12-month period used for accounting purposes and preparing financial statements, not necessarily aligning with the calendar year.

Quarterly Estimated Payments

Tax payments made each quarter by self-employed individuals and others who do not have taxes withheld from their income.

Estimated Payment

Periodic payments made towards expected tax liability before the due date to avoid penalties.

Subchapter S Corporation

A form of corporation that meets specific Internal Revenue Code requirements, offering the benefits of incorporated status while being taxed as a pass-through entity, avoiding double taxation.