Fullerton Co

question 91

Multiple Choice

Fullerton Co.has the following information from its accounting records: If Fullerton uses cash of $10,000 to pay a current liability,its:

• A)current ratio increases and its debt-to-assets ratio increases.
• B)current ratio increases and its debt-to-assets ratio decreases.
• C)current ratio decreases and its debt-to-assets ratio increases.
• D)current ratio decreases and its debt-to-assets ratio decreases.

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Definitions:

Stock Dividend

A payment made by a corporation to its shareholders in the form of additional shares, rather than cash.

Par Value

The face value of a bond or stock, representing the nominal or original value as fixed in the certificate or instrument.

Market Value

The current price at which an asset or service can be bought or sold.

Treasury Stock-Common

Shares of a company's own stock that it has reacquired from shareholders and are considered issued but not outstanding.