All else unchanged, which of the following is true when a firm sells a fixed asset on credit (an account receivable is created)?
A) The current ratio goes up but the quick ratio is unchanged.
B) The current ratio goes up but the quick ratio declines.
C) The quick ratio goes up but the current ratio is unchanged.
D) The quick ratio goes up but the current ratio declines.
E) The quick ratio and the current ratio both go up.

Question

Quizplus · Accepted Answer

When a firm sells a fixed asset on credit, both the current assets and current liabilities remain unchanged, but the account receivable increases, thus increasing both the current ratio and the quick ratio.

All Else Unchanged, Which of the Following Is True When