If a Company with a Current Ratio of 2

question 67

Multiple Choice

If a company with a current ratio of 2.0 pays $2,000 of its salaries payable, then its current ratio will

• A)change, but not enough information is provided to determine if it will increase or decrease.
• B)decrease.
• C)remain the same.
• D)increase.

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Definitions:

Contingency Payment

A payment that is made only if specific conditions are met, often used in acquisitions or contractual agreements.

Discount Rate

The interest rate used to discount future cash flows to their present value, often important in determining the value of investments or projects.

Common Stock

A type of equity security that represents ownership in a corporation, granting holders voting rights and potential dividends.

Acquisition Transaction

A business deal in which one company acquires another, either through purchase, merger, or other method.