Purchase of inventory for cash will:
A) increase the quick ratio.
B) increase the current ratio.
C) decrease the current ratio.
D) decrease the quick ratio.

Name: Purchase of inventory for cash will: A) increase the quick ratio. B) increase the current ratio. C) decrease the current ratio. D) decrease the quick ratio.
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Question

Quizplus · Accepted Answer

Purchasing inventory for cash decreases the quick ratio because it reduces cash (a quick asset) while increasing inventory, which is not included in the quick ratio calculation.

Purchase of Inventory for Cash Will