MVP Company has below ratios for the year 2021: ROA = 10% Current Ratio = 2:1 What is the effect of the following transactions on the above ratios? ( DECREASE, INCREASE, NO EFFECT) Current ratioTransactionsROA ImpactimpactIssued shares for P150,000.00Purchased equipment for cash, P25000Credit sales of P40,000 (COGS P30,000)Paid P5,000 to accounts payableReceived an electricity bill for P2,500 for electricity usedin the period.(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)

ROA is return on assets ratio, which is one of the profitability ratio which shows how much net…

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MVP Company has below ratios for the year 2021: ROA = 10% Current Ratio = 2:1 What is the effect of the following transactions on the above ratios? ( DECREASE, INCREASE, NO EFFECT)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

MVP Company has below ratios for the year 2021: ROA = 10% Current Ratio = 2:1 What is the effect of the following transactions on the above ratios? ( DECREASE, INCREASE, NO EFFECT)

Current ratio
Transactions
ROA Impact
impact
Issued shares for P150,000.00
Purchased equipment for cash, P25000
Credit sales of P40,000 (COGS P30,000)
Paid P5,000 to accounts payable
Received an electricity bill for P2,500 for electricity used
in the period.
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)

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