Assuming That the Current Ratio Is Currently 2, Which of the Following

question 37

Multiple Choice

Assuming that the current ratio is currently 2, which of the following actions will increase it?

• A) Purchasing inventory with cash.
• B) Purchasing inventory on short-term credit.
• C) Paying off a short-term bank loan with long-term debt.
• D) A customer paying an overdue bill.

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Definitions:

Unlimited Liability

A legal obligation in business where owners are personally responsible for all debts of the business, extending to their personal assets.

Limited Liability

A legal structure that protects business owners' personal assets from company debts and liabilities.