23.

What is the disadvantage of using the gross profit method when estimating ending inventory?

It relies on historical numbers in determining the gross profit percentage

Neither are disadvantages of the gross profit method

It is an estimation of inventory

Both are disadvantages

24.

Company B overstated its purchases and ending inventory by $20,000 each. Current assets and current liabilities under the correct reporting of purchases and ending inventory should have been $98,000 and $87,000, respectively. Which of the following is true?

Both statements are false

The working capital ratio is overstated when overstating purchases and ending inventory

The current ratio is greater under the correct reporting of purchases and ending inventory

Both statements are true