CFA Practice Question

There are 534 practice questions for this study session.

CFA Practice Question

Which of the following transactions will most likely result in a decrease in a company's current ratio?
A. The recording of a warranty expense
B. The payment of a property insurance policy for the following year
C. The recording of revenue before cash is received
Explanation: The recording of a warranty expense will create a warranty liability and the resulting increase in current liabilities will decrease the current ratio.

User Contributed Comments 2

User Comment
Inaganti6 I chose C. Unearned revenue goes up but so does cash by the same amount. UGH.
Mhmdjamal @inaganti6 :recording revenue before cash is received as recording of account recivables
unearned revenue means receiving cash before render the services or delivering goods
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