Which ratio will increase when accounts payable is not recorded?
A) Accounts payable/Inventory
B) Quick assets/Current liabilities
C) Accounts payable/COGS
D) Accounts payable/Total liabilities

Question

Quizplus · Accepted Answer

Accounts payable is a component of current liabilities, and not recording accounts payable will result in an understatement of current liabilities. This will increase the quick assets to current liabilities ratio (B), which measures a company's ability to cover its short-term liabilities with its most liquid assets. The other ratios listed (A, C, and D) will not be directly affected by the omission of accounts payable.

Which Ratio Will Increase When Accounts Payable Is Not Recorded