|
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
|
|
|
|
|