b. Th e composition of current assets and current liabilities does not matter e management of Ace should consider the effect of slow moving inventory on its liquidity d. Since inventory is a current asset, any increases should rise. automatically cause the current ratio to 10. The revenue recognition principle dictates that revenue should be recognized in the acco records: a. when cash is received. b. when the performance obligation is satisfied. c. at the end of the month. d. in the period that income taxes are paid. 11. La More Company had the following transactions during 2013 . Sales of $4,500 on account Collected $2,000 for services to be performed in 2014 .Paid $1,875 cash in salaries for 2013 Purchased airline tickets for $250 in December for a trip to take place in 2014 What is La More's 2013 net income using accrual accounting? a. $2,875 b. $4,875 c. $4,625 d. $2,625 12. The primary difference between a periodic and perpetual inventory system is that a periodic system a. keeps a record showing the inventory on hand at all time. b. provides better control over inventories. c. records the cost of the sale on the date the sale is made. d. determines the inventory on hand only at the end of the accounting period. 13. Financial information is presented below: S 36,000 Operating expenses Page 3