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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
effects of transactions on Ratios
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P8. Koz Corporation engaged in the transactions that follow. Opposite each transaction is a ratio and space to indicate the effect of each transaction on the ratio.
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|
 |
effect |
|
|
transaction |
Ratio |
Increase   Decrease  none |
|
a.   Sold merchandise on account. |
Current ratio |
     |
|
b.   Sold merchandise on account. |
Inventory turnover |
     |
|
c.   Collected on accounts receivable. |
Quick ratio |
     |
|
d.   Wrote off an uncollectible account. |
Receivables turnover |
     |
|
e.   Paid on accounts payable. |
Current ratio |
     |
|
f.   Declared cash dividend. |
Return on equity |
     |
|
g.   Incurred advertising expense. |
Profit margin |
     |
|
h.   Issued stock dividend. |
Debt to equity ratio |
     |
|
i.   Issued bonds payable. |
Asset turnover |
     |
|
j.   Accrued interest expense. |
Current ratio |
     |
|
k.   Paid previously declared cash dividend. |
Dividend yield |
     |
|
l.   Purchased treasury stock. |
Return on assets |
     |
|
m. Recorded depreciation expense. |
Cash flow yield |
     |
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ReQUIReD
aCCounting ConneCtion â–¶ Show that you understand the effect of business activities on performance measures by placing an X in the appropriate column to show whether the transaction increased, decreased, or had no effect on the indicated ratio.
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