For each of the following three accounting choices, indicate the decision that will yield (a) a higher net profit margin and (b) a lower current ratio. If the decision does not affect the ratio, indicate “no effect.”
1. Straight- line versus accelerated depreciation (in the first year of the asset’s life).
2. FIFO versus LIFO (in periods of constantly rising costs and rising inventory levels).
3. Straight- line depreciation with a four- year useful life versus a seven- year useful life (no residual value).