Why is the correct answer A? Wouldn't writing a $30,000 check decrease assets and paying off an account payable decrease current liabilities and therefore cancel each other out..? HELP :)
Jones, Inc. has a current ratio equal to 1.40. Which of the following transactions will increase the? company's current? ratio?
A. The company writes a? $30,000 check to pay off some existing accounts payable.
B. The company collects? $500,000 of its accounts receivable.
C. The company sells? $1 million of inventory on credit.
D. The company pays back? $50,000 of its long−term debt.
Similarly confused on this probelm. I thought paying off the short-term loans would decrease Currect liabilitie and affect it.
The acid−test ratio of a firm would be unaffected by which of the? following?
A. Large accounts receivable balances are collected.
B. Additional inventory is purchased for cash.
C. Equipment is? purchased, financed by a long−term debt issue.
D. Several short−term loans are consolidated and paid off using long−term debt.