Other Things Held Constant, Which of the Following Will Not

question 22

Multiple Choice

Other things held constant, which of the following will not affect the current ratio, assuming an initial current ratio greater than 1.0?

• A) Fixed assets are sold for cash.
• B) Long-term debt is issued to pay off current liabilities.
• C) Accounts receivable are collected.
• D) Cash is used to pay off accounts payable.
• E) A bank loan is obtained, and the proceeds are credited to the firm's checking account.

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Definitions:

Absolute Right

A legal right that is unconditional and not subject to limitations or exceptions.

Lease Expired

The conclusion of a lease agreement due to reaching its end date, typically resulting in the lessee needing to vacate the property or negotiate a new lease.

Absolute Right

a legal right that is unconditional and not subject to limitations or restrictions.

Assign The Right

The act of transferring one's legal rights or responsibilities to another party.