Assuming a current ratio of 1.0,how will the purchase of inventory with cash affect the ratio?
A)Increase the current ratio.
B)No change to the current ratio.
C)Decrease the current ratio.

Question

Quizplus · Accepted Answer

There will be no change to the current ratio because the purchase of inventory with cash will increase both the current assets (inventory) and current liabilities (cash). The ratio will remain 1:1.

Assuming a Current Ratio of 1