Roanoke Company collected $500 on account. What impact will this transaction have on the firm's current ratio?
A)Increase it
B)Decrease it
C)No impact
D)Not enough information is provided to answer the question.

Question

Quizplus · Accepted Answer

The formula for the current ratio is: current assets/current liabilities. The transaction increases one asset (cash) and decreases another asset (accounts receivable). There is no net change to current assets and no change to the current ratio.

Roanoke Company Collected $500 on Account