Question

An entity's current ratio will be influenced by:________

a) writing off an overdue account receivable against the allowance for uncollectible accounts.
b) issuance of a stock dividend.
c) the depreciation method used.
d) the inventory cost flow assumption used.

Answer 1

The correct answer is D

Step-by-step explanation:

Current ratio is the ratio which states the current assets (CA) divided though Current liabilities, this ratio state the measures whether the firm or business has adequate resources for meeting the obligation of short- term nature.

Inventory cost flow assumption defined as the inventory cost which changes from when it is purchased or built and when sold.

So, when the entity current ratio influenced through using the inventory cost flow assumption.