Wu Limited Had $350,000 of Current Assets and $120,000 of Current

question 55

Multiple Choice

Wu Limited had $350,000 of current assets and $120,000 of current liabilities before borrowing $60,000 from the bank with a 6-month note payable.What effect did the borrowing transaction have on Wu
Limited's current ratio?

• A)The ratio remained unchanged.
• B)The ratio decreased.
• C)The ratio increased.
• D)The change in the current ratio cannot be determined.

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Definitions:

Demand for Product

The quantity of a good or service that consumers are willing and able to purchase at various prices during a specified period.

Budget Constraint

An economic framework representing the combinations of goods and services an individual can purchase, given their income and the prices of those goods and services.

Indifference Curve

A graphical representation showing combinations of goods between which a consumer is indifferent, implying equal utility.

Consumer's Income

The total amount of money earned by a consumer that is available for spending and saving.