Accounting 9706 · AS & A Level · Analysis and communication of accounting information

Analysis and communication of accounting information — practice question

A business buys inventory with cash. What effect will this have on liquidity ratios?

  • Acurrent ratio decrease; liquid (acid test) ratio decrease
  • Bcurrent ratio decrease; liquid (acid test) ratio increase
  • Ccurrent ratio no change; liquid (acid test) ratio decrease
  • Dcurrent ratio no change; liquid (acid test) ratio increase

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