Assuming a Current Ratio of 1

question 110

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:

Homo Erectus

An extinct species of hominid that lived from roughly 1.9 million to about 140,000 years ago, known for being one of the first hominins to have a stature and gait similar to that of modern humans.

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The creation of a personal narrative that provides a coherent sense of the self. An individual’s impression that the world is stable, continuous, and predictable, which is often produced through routinized activity.

Precarity

A condition of existence without predictability or security, affecting material or psychological welfare.

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