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.
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Current ratio
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Acid-test ratio
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Debt to equity ratio
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1
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Company issued ordinary shares for cash
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2
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Bought raw material on account
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3
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Received money from accounts receivable
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4
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Expiration of prepaid rent
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5
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Payment of cash dividend
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6
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Purchase long term investment with cash
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7
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Sale of fixed assets for cash with no gain or loss
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8
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Stock write off
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9
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Refinance on a long term basis currently matured debt
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10
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Bought fixed asset with a 6 month note
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