Current ratio distortion under LIFO inventory costing may be adjusted by

A) adding the LIFO reserve to current assets.
B) subtracting the LIFO reserve from current assets.
C) adding the LIFO reserve to current liabilities.
D) subtracting the LIFO reserve from current liabilities.

LIFO Reserve

The difference between the cost of inventory calculated under the Last In, First Out method and the FIFO (First In, First Out) method.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations, calculated as current assets divided by current liabilities.

Current Assets

Short-term assets that are expected to be converted into cash, sold, or consumed within one year or the business's operating cycle, whichever is longer.