Barcelona Travel Inc. took out a 2-year loan in late December. Because the loan is for more than 1 year in length, it is not included in current liabilities even though the cash received from the loan is reported as a current asset. This results in improving current and quick ratios and a stronger looking year-end balance sheet. This action taken by Barcelona is an example of: window dressing. O trend analysis. O percent change analysis. O benchmarking.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Question
Which of the following transactions would decrease total current assets, increase the current ratio,
and have no effect on net income?
Borrow using short-term debt and use the proceeds to repay debt that has a maturity of more
than one year.
O Federal income tax due for previous year is paid.
O Use cash to repurchase some of the company's own stock.
O Marketable securities are sold below cost.
Transcribed Image Text:Which of the following transactions would decrease total current assets, increase the current ratio, and have no effect on net income? Borrow using short-term debt and use the proceeds to repay debt that has a maturity of more than one year. O Federal income tax due for previous year is paid. O Use cash to repurchase some of the company's own stock. O Marketable securities are sold below cost.
Barcelona Travel Inc. took out a 2-year loan in late December. Because the loan is for more than 1
year in length, it is not included in current liabilities even though the cash received from the loan is
reported as a current asset. This results in improving current and quick ratios and a stronger looking
year-end balance sheet. This action taken by Barcelona is an example of:
O window dressing.
O trend analysis.
O percent change analysis.
O benchmarking.
Transcribed Image Text:Barcelona Travel Inc. took out a 2-year loan in late December. Because the loan is for more than 1 year in length, it is not included in current liabilities even though the cash received from the loan is reported as a current asset. This results in improving current and quick ratios and a stronger looking year-end balance sheet. This action taken by Barcelona is an example of: O window dressing. O trend analysis. O percent change analysis. O benchmarking.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Budgeting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education