On January 2, 2013, the company recorded the following transaction: Recording this transaction will:
A)decrease the current ratio to 1:1
B)increase the current ratio to 5:1
C)have no effect on the current ratio
D)increase the current ratio to 3:1

Question

On January 2, 2013, the company recorded the following transaction:  Recording this transaction will:
A)decrease the current ratio to 1:1 
B)increase the current ratio to 5:1 
C)have no effect on the current ratio 
D)increase the current ratio to 3:1

Quizplus · Accepted Answer

$6,000 current assets before transaction + $4,000 increase in accounts receivable = $10,000; $10,000/$2,000 current liabilities = 5:1 current ratio

On January 2, 2013, the Company Recorded the Following Transaction