How would the following transactions affect the current ratio and the acid-test ratio? (a) Purchase of inventory
Question:
(a) Purchase of inventory with cash;
(b) Sale of inventory for more than its cost. Assume that prior to these transactions the current ratio and acid-test ratio are both less than one.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 46% (15 reviews)
a The purchase of inventory with cash would have no effect on t...View the full answer
Answered By
Ashish Bhalla
I have 12 years work experience as Professor for Accounting, Finance and Business related subjects also working as Online Tutor from last 8 years with highly decentralized organizations. I had obtained a B.Com, M.Com, MBA (Finance & Marketing). My research interest areas are Banking Problem & Investment Management. I am highly articulate and effective communicator with excellent team-building and interpersonal skills; work well with individuals at all levels.
4.80+
17+ Reviews
46+ Question Solved
Related Book For
Financial Accounting
ISBN: 978-0078025549
3rd edition
Authors: J. David Spiceland, Wayne Thomas, Don Herrmann
Question Posted:
Students also viewed these Accounting questions
-
How would the following transactions affect U.S. exports, imports, and net exports? a. An American art professor spends the summer touring museums in Europe. b. Students in Paris flock to see the...
-
How would the following transactions affect U.S. net capital outflow? Also, state whether each involves direct investment or portfolio investment. a. An American cellular phone company establishes an...
-
How would each of the following transactions affect the GDP of the United States? a. The U.S. government pays $1 billion in salaries for government workers. b. The U.S. government pays $1 billion to...
-
A stiff, straight, horizontal wire of length 25 cm and mass 20 g is supported by electrical contacts at its ends, but is otherwise free to move vertically upward. The wire is in a uniform, horizontal...
-
What may be meant by the statement that the order condition of identification is a necessary but not sufficient condition for identification?
-
Recall that in a random sample of 106 social (or service) robots designed to entertain, educate, and care for human users, 63 were built with legs only, 20 with wheels only, 8 with both legs and...
-
What is wokerwashing, and how does this practice relate to brands that take a stand on social justice issues?
-
The Rollins Sporting Goods Company manufactures baseballs for the professional minor and major leagues at its plants in Costa Rica. According to the rules of major league baseball, a baseball must...
-
The overhanging beam is made of wood having the allowable tensile and compressive stresses of (allow) = 4 MPa and (allow) 4.75 MPa (Figure 1) Part A Determine the maximum concentrated force P that...
-
Assistant police chief Todd Beck wants to analyze the citys historic crime data in order to better allocate police resources in the future. He collects data over the past two years. Each record in...
-
Explain the differences among working capital, the current ratio, and the acid-test ratio.
-
On November 1, Bahama Cruise Lines borrows $4 million and issues a six-month, 6% note payable. Interest is payable at maturity. Record the issuance of the note and the appropriate adjustment for...
-
A 10-cm-diameter cylinder of neon gas is 30 cm long and at 30C. The pressure gauge reads 120 psi. What is the mass density of the gas?
-
ABC Co has a target debt ratio of 40% and it keeps this target. The cost of equity is 10% and the cost of debt is 4%. It is considering expanding its business and requires $1 million investment....
-
Consider an economy where there is uncertainty about the future. In particular, at the current date t all agents are unsure which of the 3 possible states (w1, W2, W3) will mate- rialize at date t+...
-
The pharmacy's computer system costs $ 950,000 aA pharmacy purchased a bottle of Amoxil for $27.14 and sold it for $42.80. What was the % profitend should last 5 years. Its disposal value is $55,000....
-
Briefly describe the three main processes that utilize ATP as a free energy source.
-
A partner has contributed property and its associated liability to a partnership in exchange for a partnership interest. What is the amount that the partnership will record as tax basis of the...
-
Vinegar is a 5% solution (by weight) of acetic acid in water. Determine the mole fraction and molality of acetic acid. What is the concentration of acetic acid in parts per million (ppm)? Explain why...
-
9.Consider the reaction 3NO2(g)+H2O=2HNO3(aq)+NO(g) where Delta H=-137 kJ.How many kilojoules are released when 92.3g of NO2 reacts?
-
Estimate the average slope of the watershed shown in Figure 4.4 regarding Table 4.2 if the watershed is divided into five intervals. FIGURE 4.4 Watershed in Example 4.4. 3758m 2994m 3466m 3405m 3375m...
-
Beginning inventory, purchases and sales for item B901 are as follows; Assuming a perpetual inventory system and using the first-in, first-out (FIFO) method, determine (a) The cost of merchandise...
-
Beginning inventory, purchases and sales for item CSW15 are as follows; Assuming a perpetual inventory system and using the first-in, first-out (FIFO) method, determine (a) The cost of merchandise...
-
Beginning inventory, purchases, and sales for item (QED9) are as follows: Assuming a perpetual inventory system and using the last-in, first-out (LIFO) method, determine (a) The cost of merchandise...
-
Describe one way to overcome procrastination we learned from de Janasz, Dowd and Schneider ( 2 0 2 2 ) and how that way helped you to complete this assignment before the deadline.
-
Ralph has total income of $ 5 3 0 0 0 . He has business expenses of $ 1 8 0 0 0 , made a $ 5 0 0 0 RRSP contribution and incurred $ 4 0 0 0 in tuition expenses for his daughter, who did not work and...
-
AT Travel Limited acquired a two - story building for use as an office on June 3 0 , 2 0 2 2 , at $ 2 million. The building is expected to have a useful life of 2 0 years and a residual value of $ 1...
Study smarter with the SolutionInn App