Assume that the following errors were overlooked by both the companys accounting staff and the companys auditors when preparing the financial statements for the last fiscal year:

a) Prepaid expenses were not adjusted for $2 million of insurance coverage that expired (used) during the year.

b) Did not accrue $5 million as a provision to settle a tax dispute with Canada Revenue Agency.

1. For error a), indicate whether each of the following ratios will increase, decrease or remain unchanged:

Gross profit percentage,

Return on assets

Net profit margin.

For error b), indicate whether each of the following ratios will increase, decrease or remain unchanged:

Quick ratio,

Return on equity,

Fixed assets turnover ratio