Which of the following accurately describes how the collection of cash on account from a customer would affect the ratios indicated?
A)Option A
B)Option B
C)Option C
D)Option D

Question

Which of the following accurately describes how the collection of cash on account from a customer would affect the ratios indicated? 
A)Option A 
B)Option B 
C)Option C 
D)Option D

Quizplus · Accepted Answer

Collecting cash on account reduces the accounts receivable balance, which in turn reduces the current assets and the current ratio. It also increases the cash balance, which in turn increases the quick ratio. The debt-to-equity ratio and the inventory turnover ratio are not directly affected by the collection of cash on account.

Which of the Following Accurately Describes How the Collection of Cash