A

B

C

D

E

1

Account

Debit

Credit

Impact on current ratio

Impact on profit margin

2

Payroll expense

72,000

3

Accrued payroll

72,000

4

5

Depreciation expense

125,000

6

Accumulated depreciation

125,000

7

8

Prepaid insurance

15,000

9

Insurance expense

15,000

 

The senior accountant has identified three misstatements that have been carried forward onto the summary of proposed audit adjustments. Determine the impact of the identified misstatements on the financial statement ratios noted below. For each of the identified misstatements below, indicate the impact on the financial ratio identified. In columns D and E, select the impact, if any, that the misstatement has on the financial ratio from the option list. Selections used once, more than once, or are not at all. Consider each misstatement independently. Choices for Columns D and E: decrease increase no impact