Which of the following transactions would result in a decrease in the current ratio?
A)Collection of cash from an account receivable.
B)Selling shares of stock to stockholders in exchange for cash.
C)Purchasing a delivery vehicle by signing a long-term note payable.
D)Declaration of a cash dividend by the board of directors.

Question

Quizplus · Accepted Answer

The current ratio is current assets divided by current liabilities. A cash dividend reduces current assets, and decreases the current ratio.

Which of the Following Transactions Would Result in a Decrease