Question
If Evans Company uses the periodic inventory system, what is the impact on the current ratio (Current assets/Current liabilities) of including goods in transit f.o.b.
If Evans Company uses the periodic inventory system, what is the impact on the current ratio (Current assets/Current liabilities) of including goods in transit f.o.b. shipping point in purchases, but not ending inventory?
Overstate the current ratio.
Understate the current ratio.
No effect on the current ratio.
Not sufficient information to determine effect on the current ratio.
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
Managerial Accounting
Authors: Karen Wilken Braun, Wendy M. Tietz
2nd Custom Edition
1269396803, 978-1269396806
