Question

Which statement is true concerning gains and losses? a. The amounts of gains and losses are...

Which statement is true concerning gains and losses?

a. The amounts of gains and losses are included in the calculation of the current ratio, in the numerator and denominator, respectively.

b. Gains and losses are reported on the balance sheet in the Assets and Liabilities sections, respectively.

c. None of the above.

Business   Accounting   
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Homework Answers

Answer #1

Test for Statement a.

Current ratio = Current assets / Current liabilities

Amunt of gain or losses neither falls under current assets not falls under current liabilities so given statement given is wrong.

Test for Statement b.

Balance sheet comprise of Assets and liabilities and gains and losses neither falls under assets nor under the liabilities. They are reflected in Income statement. so given statement given is wrong.

Correct answer is c. None of the above.

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