Which of the following transactions would increase a company's positive current ratio?
A)Borrow money on a short-term note
B)Use the equity method to reflect earnings of an investee
C)Repay the principal on a short-term note
D)Sell a temporary investment at a loss
E)None of these choices would increase a company's positive current ratio

Question

Quizplus · Accepted Answer

Repaying the principal on a short-term note decreases current liabilities without affecting current assets, thus increasing the current ratio, which is calculated as current assets divided by current liabilities.

Which of the Following Transactions Would Increase a Company's Positive