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lapo4ka [179]
3 years ago
6

When examining whether a company has underrecorded accounts payable, all of the following ratios are helpful EXCEPT: a. Quick as

sets ÷ Current liabilities b. Unearned revenue ÷ Accounts payable c. Accounts payable ÷ Purchases d. Accounts payable ÷ Cost of goods sold
Business
1 answer:
Valentin [98]3 years ago
3 0

<u>Answer:</u> Option B

<u>Explanation:</u>

Under recording the liability in the balance sheet such as accounts payable may become a liability fraud case. It is significant that the balance sheet has to be analysed using the acid test ratio which is quick assets/current liabilities. If this ratio has increased suddenly then it is clear that the accounts payable is understated.

Unearned revenue/ accounts payable ratio is used to determine the current liability of the company. This ratio cannot be used to find the under recorded accounts payable.

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