Wilker Industries has a current ratio of 1.8.If Wilker collects a payment from a customer on account, what is expected to happen to the company's current ratio?
A)It will increase.
B)It will decrease.
C)It will stay the same.
D)The effect is based on the amount of debt a company holds at the end of the period.

Question

Quizplus · Accepted Answer

Collecting a payment from a customer on account increases cash and decreases accounts receivable by the same amount, leaving total current assets unchanged, so the current ratio remains the same.

Wilker Industries Has a Current Ratio of 1