A Company Has Current Assets of $200,000 and Current Liabilities

question 62

Multiple Choice

A company has current assets of $200,000 and current liabilities of $150,000.If they used cash to pay off some accounts payable, what would the effect be on their current ratio?

• A)The current ratio would increase.
• B)The current ratio would decrease.
• C)The current ratio would stay the same.
• D)The effect on the current ratio would depend on the amount paid.

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Definitions:

General Adaptation Syndromes

General Adaptation Syndrome is a theoretical framework describing the body's short-term and long-term reactions to stress, comprising three stages: alarm, resistance, and exhaustion.

Stress

A physical or emotional response to external or internal pressures, perceived as challenging or threatening to an individual's well-being.

Moderate Level

Indicates a degree of intensity, severity, or concentration that is neither too high nor too low but within a middle range.

Anxiety

A feeling of worry, nervousness, or unease about something with an uncertain outcome, often experienced as a mental health condition.