If a firm has a current ratio of 2,the subsequent receipt of a 60-day note receivable to settle an open account will cause the ratio to decrease.

Question

Quizplus · Accepted Answer

The current ratio is calculated by dividing current assets by current liabilities. The subsequent receipt of a 60-day note receivable, which is an asset, will not affect the current liabilities. Therefore, the current ratio will remain the same or increase.

If a Firm Has a Current Ratio of 2,the Subsequent