Question

For question 1, 2 and 3, Indicate whether each of the actions listed below will immediately...

For question 1, 2 and 3, Indicate whether each of the actions listed below will immediately increase (I), decrease (D), or have no effect (N) on the ratio shown. Assume each ratio is greater than 1.0 before the action is taken.

1. Purchase of inventory for cash - What is the effect on the Acid Test Ratio

2. Collection of an Accounts Receivable - What is the effect on Current Ratio

3. Payment for Advertising Expense - What is the effect on Total Debt to Equity Ratio

4. What does the debt to equity ratio tell you?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

1.Purchase of inventory for cash-D

The purchase of inventory for cash would reduce the acid test ratio.

2.Collection of an Accounts receivable-N

Collection of an accounts receivable has no effect on current ratio

3.Payment for advertising expense-N

Payment for advertising expense will have no effect on total debt to equity ratio

4.Debt to equity ratio is used for calaculation of a company's financial leverage.Under it the total liabilities of a company are divided by its shareholder's equiyy.It depicts the contribution made by shareholders or creditors to the capital of a company's business.It shows how much debt the company is using to carry out its business.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Increases and decreases in various types of accounts are listed below. In each case, indicate by...
Increases and decreases in various types of accounts are listed below. In each case, indicate by "Dr." or "Cr." (a) whether the change in the account would be recorded as a debit or a credit and (b) whether the normal balance of the account is a debit or a credit. (a) (b) Recorded As Normal Balance 1. Increase in Denice Dickenson, Capital 2. Increase in Denice Dickenson, Drawing 3. Decrease in Accounts Receivable 4. Increase in Notes Payable 5. Increase...
Indicate the effect of each of the following transactions on (1) the current ratio, (2) working...
Indicate the effect of each of the following transactions on (1) the current ratio, (2) working capital, (3) stockholders’ equity, (4) book value per share of common stock, and (5) retained earnings. Assume that the current ratio is greater than 1:1. (Indicate the effect of each transactions by selecting "+" for increase, "–" for decrease, and "NC" for no change.) Collected account receivable. Wrote off account receivable. Converted a short-term note payable to a long-term note payable. Purchased inventory on...
2.         For each of the following items indicate whether the transactions listed below increased (+), decreased...
2.         For each of the following items indicate whether the transactions listed below increased (+), decreased (–) or had no effect (0) by inserting the appropriate symbol. ? Net Income Assets Liab. Owners' Equity Cash Flows a. Sold equipment for cash at a gain b. Recorded amortization expense on patents c. Paid cash for minor repairs to an asset d. Recorded a revenue expenditure incurred on account e. Paid cash to remove old building from land being prepared for use
(For questions 23-28) For each account listed below indicate whether it ordinarily has a debit (D)...
(For questions 23-28) For each account listed below indicate whether it ordinarily has a debit (D) or credit (C) balance. Advertising expense Inventory Accrued salaries Cost of goods sold Revenue Notes payable
For each of the following independent statements, indicate whether the trans-action will increase (1), decrease (2),...
For each of the following independent statements, indicate whether the trans-action will increase (1), decrease (2), or have no effect (NE) on the basis of a shareholder’s stock in an S corporation. a. Expenses related to tax-exempt income. b. Short-term capital gain. c. Nonseparately computed loss. d. Section 1231 gain. e. Depletion not in excess of basis. f. Separately computed income. g. Nontaxable return-of-capital distribution by the corporation. h. Advertising expenses. i. j. Business gifts in excess of $25. Depreciation...
For each item below, indicate whether a debit or credit applies. 1. Increase in Accounts Payable...
For each item below, indicate whether a debit or credit applies. 1. Increase in Accounts Payable 2. Increase in Accounts Receivable 3. Increase in Retained Earnings 4. Decrease in Unearned Service Revenue 5. Decrease in Interest Payable
For each of the events listed below, select the category that best describes its effect on...
For each of the events listed below, select the category that best describes its effect on a statement of cash flows. Your categories are as follows: a - Cash provided/used by operating activities b - Cash provided/used by investing activities c - Cash provided/used by financing activities d - Not a cash flow item Events: _____ 1. Payment on long-term debt _____ 2. Issuance of bonds at a premium _____ 3. Collection of accounts receivable _____ 4. Cash dividends declared...
1. For each transaction, indicate whether a company would classify the related account as an asset,...
1. For each transaction, indicate whether a company would classify the related account as an asset, liability, stockholders' equity, dividend, revenue, or expense. Transactions Related Accounts Account Classification 1. Receive cash from investors. Common Stock 2. Pay rent for the current period. Rent Expense 3. Purchase office equipment. Equipment 4. Pay cash to stockholders. Dividends 5. Provide services to customers. Service Revenue 2. Account classifications include assets, liabilities, stockholders' equity, dividends, revenues, and expenses. Indicate the account classification for each...
Question 3.2 (Total: 22 marks; 2 marks each) For each of the items listed below, indicate...
Question 3.2 (Total: 22 marks; 2 marks each) For each of the items listed below, indicate how it should be treated in the financial statements. Use the following letter code for your selections: a. Ordinary item on the income statement b. Discontinued operations c. Unusual item on the income statement d. Adjustment to prior year’s retained earnings _____ 1. The bad debt rate was increased from 1% to 2% of sales, thus increasing bad debt expense. _____ 2. Obsolete inventory...
Helfrey Marketing Services uses the listed accounts. 1. Prepare two T accounts for each transaction. On...
Helfrey Marketing Services uses the listed accounts. 1. Prepare two T accounts for each transaction. On each T account, select the account title of one of the accounts affected by the transaction. 2. Enter the debit or credit amount in each T account to show the transaction’s effect. account titles: Cash Supplies Prepaid Insurance Accounts Receivable-Neco Valenza Accounts Payable-All Star Company Sawyer Helfrey, Capital Sawyer Helfrey, Drawing Sales Advertising Expense Rent Expense transactions: Jun. 11. Received cash from sales, $22,000.00....
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT