At the end of 2024, Barker Corporations preliminary trial balance indicated a current ratio of 1.2. Management
Question:
At the end of 2024, Barker Corporation’s preliminary trial balance indicated a current ratio of 1.2. Management is contemplating paying some of its accounts payable balance before the end of the fiscal year. Determine whether the effect of this transaction would increase or decrease the current ratio. Would your answer be the same if the preliminary trial balance indicated a current ratio of 0.8?
Step by Step Answer:
Paying accounts payable reduces both current assets and c...View the full answer
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A trial balance is a list of all the general ledger accounts contained in the ledger of a business. This list will contain the name of each nominal ledger account and the value of that nominal ledger balance. Each nominal ledger account will hold either a debit balance or a credit balance
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