As of December 31, Year 1, Gant Corporation had a current ratio of 1.29, quick ratio of 1.05, and working capital of $18,000. The company uses a perpetual inventory system and sells merchandise for more than it cost. On January 1, Year 2 Gant paid $3,600 on accounts payable. Which of the following statements is not true?
A. Gant's working capital will remain the same.
B. Gant's quick ratio will increase.
C. Gant's current ratio will increase.
D. Gant's quick ratio will increase and its current ratio will decrease.
Answer: D
You might also like to view...
List and briefly describe the method used to account for investments in equity securities with more than 50% ownership.
What will be an ideal response?
Lovely Locks, a maker of shampoos, is considering entering the cosmetics product. The company has a line of mascara and eyeliner it wants to introduce to the market. However, first Lovely Locks must obtain approval from the ________
A) Environmental Protection Agency B) Interstate Commerce Commission C) Food and Drug Administration D) Federal Trade Commission E) Federal Communications Commission
Which of the following is the most risky for an exporter?
A. Irrevocable letter of credit B. Bank collection time draft C. Open account D. Revocable letter of credit E. Cash in advance
Which of the following is a reason for the growth of administrative agencies?
A) Administrative agency hearings are governed by strict rules of evidence. B) The staff of each of the agencies has technical expertise in a wide range of areas. C) Administrative agency hearings reduce the burden on the state and federal court systems. D) Administrative agencies promote deregulation in all industries.