Which of the following would improve a current ratio that is now 1.2?
A)Selling long-term assets for cash.
B)Purchasing land for cash.
C)Buying equipment in exchange for a two-year note.
D)Purchasing inventory on account.

Question

Quizplus · Accepted Answer

The current ratio measures the company's ability to pay its current liabilities.It is calculated by dividing current assets by current liabilities.Selling long-term assets for cash would increase the numerator and have no effect on the denominator;as such,it would improve the company's current ratio.

Which of the Following Would Improve a Current Ratio That