The following information concerning the current assets and current liabilities of
Mason Company at December 31, 2010, is presented below.
Based on this information, how would the current ratio be affected if Mason collects the accounts receivable and then uses some of the cash to pay off the accounts payable?
a. The current ratio would increase from 1.30 to 1.93.
b. The current ratio would increase from 0.74 to 4.02.
c. The current ratio would decrease from 1.30 to 0.62.
d. The current ratio would increase from 1.09 to 1.61.

Question

The following information concerning the current assets and current liabilities of
Mason Company at December 31, 2010, is presented below.
  Based on this information, how would the current ratio be affected if Mason collects the accounts receivable and then uses some of the cash to pay off the accounts payable? 
a. The current ratio would increase from 1.30 to 1.93.
b. The current ratio would increase from 0.74 to 4.02.
c. The current ratio would decrease from 1.30 to 0.62.
d. The current ratio would increase from 1.09 to 1.61.

Quizplus · Accepted Answer

The Answer of The following information concerning the current assets and current liabilities of
Mason Company at December 31, 2010, is presented below.
  Based on this information, how would the current ratio be affected if Mason collects the accounts receivable and then uses some of the cash to pay off the accounts payable? 
a. The current ratio would increase from 1.30 to 1.93.
b. The current ratio would increase from 0.74 to 4.02.
c. The current ratio would decrease from 1.30 to 0.62.
d. The current ratio would increase from 1.09 to 1.61.

The Following Information Concerning the Current Assets and Current Liabilities