Which of the following ratios is unaffected by the choice between translation under the all-current method and remeasurement under the temporal method? A) Accounts payable turnover. B) Quick ratio. C) Current ratio. The answer is B, which i know. but why not A?
cuz its a mixed ratio
Accounts Payable Turnover = COGS / AP. COGS has different measurements under Current Rate and Temporal (because of the Cost flow assumptions). Quick Ratio = (Current Assets - Inventory )/ Current Liabilities Once Inventory is removed - everything is measured at the Current Rate on both methods. Current Ratio - Contains Inventory on the numerator - where again flow assumption makes a difference. So B is the right answer.
Quick involves backing out Inventory, so unaffected.
thanks i forgot AP used COGS, not sales