Question
Assessing Liquidity At the end of 2016, Marley Company discovered that its accountant erroneously recorded $40,000 of inventory purchased for cash at year-end as: Equipment
Assessing Liquidity
At the end of 2016, Marley Company discovered that its accountant erroneously recorded $40,000 of inventory purchased for cash at year-end as:
Equipment (-L) ............................................................................. | 40,000 | |
Cash (-A) ............................................................................... |
| 40,000 |
If the current ratio, quick ratio and net working capital had already been computed using the erroneous data, the correction of the accounting records will have which of the following effects?
Select one:
a. Quick ratio will decrease
b. Net working capital will decrease
c. Current ratio will stay the same
d. None of these is correct
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started