Assuming a current ratio of 1.0,how will the purchase of inventory with cash affect the ratio?
A)Increase the current ratio.
B)No change to the current ratio.
C)Decrease the current ratio.
D)Could either increase or decrease the current ratio.

Question

Quizplus · Accepted Answer

The purchase of inventory with cash will not affect the current ratio, as both current assets and current liabilities will decrease by the same amount, resulting in no change to the ratio.

Assuming a Current Ratio of 1