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:

Oligopolists

Firms or individuals that dominate a particular market, leading to a market structure known as oligopoly, where a few entities control the majority of market share.

Undistributed Profits

Profits earned by a company that are not paid out as dividends to shareholders but are retained within the company for reinvestment.

Entry Barriers

Obstacles that prevent or hinder new competitors from easily entering an industry or market.

Inverted-U Theory

A hypothesis suggesting that a variable can produce effects that increase to a point after which further increases in the variable lead to a decline in the effect.