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    Financial Statements of Univor Company

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    Univor Company reported an increase in inventories in the past year. What is the effect of this change on the current ratio (current assets _ current liabilities)? What does this tell a statement user about Buildeasy's liquidity?

    What is one of the major limitations of the balance sheet as a source of information?

    What is a "Summary of Significant Accounting Policies" and why is it needed?

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    Solution Preview

    Univor Company reported an increase in inventories in the past year. What is the effect of this change on the current ratio (current assets _ current liabilities)? What does this tell a statement user about Buildeasy's liquidity?

    Answer:

    As Univor Company has reported an increase in inventory in the past year, it will affect the current ratio of the company, i.e the current ratio will be increased as the inventory has increased because it shows the relationship between the current assets and current ...

    Solution Summary

    This solution looks at the effect of an increase in a company's inventories on the asset/liability ratio, addresses the limitations of a balance sheet, and explains what a "Summary of Significant Accounting Policies" is.

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