Which of the following transactions would increase the current ratio of a company if the ratio is currently greater than 1?
A)Paid the principal on a long-term note payable.
B)Borrowed cash on a short-term note.
C)Sold inventory for more than cost.
D)Purchased supplies with cash.

Question

Quizplus · Accepted Answer

Selling inventory for more than cost would increase the company's current assets, specifically cash or accounts receivable, without affecting current liabilities, thereby increasing the current ratio. The other options would either decrease current assets (A and D) or increase current liabilities (B), leading to a decrease in the current ratio if it was initially greater than 1.

Which of the Following Transactions Would Increase the Current Ratio