Which of the Following Transactions Increases Both the Quick Ratio

question 105

Multiple Choice

Which of the following transactions increases both the quick ratio and the current ratio assuming that both ratios are greater than 1?

• A)Collecting an account receivable.
• B)Purchasing inventory on account.
• C)Accruing revenue earned at year-end.
• D)Selling inventory on account at the cost of the inventory.

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Definitions:

Demand

The quantity of a product or service that consumers are willing and able to purchase at various prices.

Grocery Stores

Grocery stores are retail establishments primarily engaged in offering a general range of food products, which may also include fresh produce, meats, dairy, and bakery items alongside household goods.

Fixed Costs

Expenses that do not change with the level of goods or services produced by a business.

Variable Costs

Costs that vary directly with the level of production or output, in contrast to fixed costs, which remain constant regardless of the level of activity.