A Company Has a Current Ratio of 2

question 80

Multiple Choice

A company has a current ratio of 2.0 and a quick ratio of 1.4.If the company then collects an accounts receivable,which of the following is a true statement?

• A)The current ratio will not change and the quick ratio will increase.
• B)The current ratio will increase and the quick ratio will increase.
• C)The current ratio and the quick ratio will not change.
• D)The current ratio will increase and the quick ratio will decrease.

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Definitions:

Liability

A legal obligation or responsibility for the outcome of actions or for the debts of another.

Term-Life Insurance

Life insurance that provides coverage for a specified term.

Specified Term

A fixed-duration period explicitly stated in a contract or agreement, after which the contract may expire if not renewed.

Incontestability Clause

A provision in a life insurance policy that prevents the insurer from disputing the policy's validity after it has been in force for a certain period, typically two years, except under circumstances such as fraud.