A Company with $60,000 in Current Assets and $40,000 in Current

question 27

Multiple Choice

A company with $60,000 in current assets and $40,000 in current liabilities pays a $1,000 current liability.As a result of this transaction, the current ratio and working capital will:

• A) remain the same and decrease, respectively.
• B) increase and remain the same, respectively.
• C) both increase.
• D) both decrease.

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Definitions:

Durbin-Watson D Statistic

A statistical tool designed to determine the existence of first-lag autocorrelation in the residuals of a regression analysis.

Regression Analysis

A statistical method for investigating the relationship between a dependent variable and one or more independent variables.

Durbin-Watson Statistic

A measure used in statistics to find out whether autocorrelation at lag one occurs in the residuals after performing a regression analysis.

First-Order Autocorrelation

The correlation of a signal with a delayed version of itself, particularly measuring the correlation between values that are one time period apart.