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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.

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