Question

Indicate whether each of the following transactions and economic events will increase, decrease, or have no effect have on the current ratio, quick ratio, accounts receivable turnover ratio, and the average collection period of accounts receivable. Assume that the current and quick ratios are greater than 1.0 before each of the items is considered and the company uses accrual accounting.
1. Credit sale.
2. Recording a new long-term receivable.
3. Cash sale.
4. Recording the accrual for sales returns.
5. Customer returns merchandise (ignore the impact on inventory and cost of sales).
6. A GIC classified as a cash equivalent matures and cash is received from the bank.
7. Writing off an uncollectible account.



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  • CreatedFebruary 26, 2015
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