Question
Indicate the effect of the transaction listed below on each of the following: Use + to indicate an increase, - to indicate a decrease and
Indicate the effect of the transaction listed below on each of the following:
Use" + "to indicate an increase, "-" to indicate a decrease and "0 "to indicate no effect. Assume an initial current ratio of more than 1 to 1
Individual transactions often have a significant impact on ratios. This problem will consider the direction of such an impact.
| Total Current Assets | Total Current Liabilities | Net Working Capital | Current Ratio |
Cash is acquired through issuance of additional common stock |
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Merchandise is sold for cash (Assume a profit) |
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A fixed asset is sold for more than book value |
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Payment is made to trade creditors for previous purchases. |
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A cash dividend is declared and paid. |
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A stock dividend is declared and paid. |
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Cash is obtained through long term loans. |
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A profitable firm increases its fixed assets depreciation allowance account |
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Current operating expenses are paid. |
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Ten-year notes are issued to pay off accounts payable |
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Accounts receivable are collected. |
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