If Current Assets Exceed Current Liabilities, Payments to Creditors Made

question 70

Multiple Choice

If current assets exceed current liabilities, payments to creditors made on the last day of the month will:

• A)increase current ratio.
• B)decrease net working capital.
• C)increase net working capital.
• D)decrease current ratio.
• E)have no effect on either the current ratio or net working capital.

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Definitions:

Net Income

The total earnings of a company after subtracting all expenses from revenue, indicating the company's profit.

Dividends

Dividends are a portion of a company's earnings that are distributed to shareholders as a reward for their investment in the company.

Net Income

The total earnings of a company after deducting all expenses, taxes, and losses, representing the profit for the period.

Income Statement

A financial document detailing a company's revenue, expenses, and profit over a specific period.