On January 1,2015,Gatewood paid $200 for transportation costs on merchandise it had received.Which of the following statements is incorrect?

Question

Quizplus · Accepted Answer

The payment of $200 for transportation costs will decrease Gatewood's current assets by $200 (assuming it was paid in cash) and will decrease Gatewood's current ratio by reducing the numerator (current assets) without affecting the denominator (current liabilities). Gatewood's working capital will also decrease by $200. However, the quick ratio will only decrease if the $200 was paid from cash or other highly liquid assets such as marketable securities. If it was paid from inventory or accounts receivable, the quick ratio would remain the same.

On January 1,2015,Gatewood Paid $200 for Transportation Costs on Merchandise