If a Company Has an Acid-Test Ratio of 1

question 84

Short Answer

If a company has an acid-test ratio of 1.2:1, what respective effects will the borrowing of cash by short-term debt and collection of accounts receivable have on the ratio? $\begin{array}{lll}&\text { Short-term Borrowing }&\text {Collection of Receivable }\\\text { a. } & \text { Increase } & \text { No effect } \\\text { b. } & \text { Increase } & \text { Increase } \\\text { c. } & \text { Decrease } & \text { No effect } \\\text { d. } & \text { Decrease } & \text { Decrease }\end{array}$

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Definitions:

Physical Process

Natural phenomena or mechanisms that involve the physics of matter and can affect the environment and ecosystem.

Oxygen-demanding Wastes

Organic wastes that reduce the amount of dissolved oxygen in water, often resulting from industrial or agricultural processes.

Activated Sludge

A process in wastewater treatment involving aerated microbial cultures that digest organic matter, reducing pollution before discharge into natural water bodies.

Biological Process

A process that occurs within living organisms, contributing to growth, reproduction, and other aspects of life.