Which of the following would a company be most likely to overstate if the company was trying to mislead potential creditors as to its ability to pay debts as they become due?
A)Accounts Receivable
B)Notes Payable
C)Salaries Expense
D)Accounts Payable

Question

Quizplus · Accepted Answer

If the company is trying to mislead creditors,it would want to overstate its current ratio.A higher current ratio means better ability to pay.The current ratio is computed by dividing current assets by current liabilities.A higher current ratio would result if the company overstated its current assets,which include Accounts Receivable.

Which of the Following Would a Company Be Most Likely