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Accounting Test Question IFS No 4 : Interpretation Of Financial Statements

November 10th, 2006 /

Accounting Test Question No IFS 4:

Effect of Management Decisions On Ratios

Require:

Put by letter whether each of the actions listed below will immediately

-increase (I),

-decrease (D) or

-have no effect (N) on the ratios shown.

Current ratio

Acid-test ratio

Debt to equity ratio

1

Company issued ordinary shares for cash

2

Bought raw material on account

3

Received money from accounts receivable

4

Expiration of prepaid rent

5

Payment of cash dividend

6

Purchase long term investment with cash

7

Sale of fixed assets for cash with no gain or loss

8

Stock write off

9

Refinance on a long term basis currently matured debt

10

Bought fixed asset with a 6 month note

[ Refer Answer ]

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