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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

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