A Firm Has $600,000 in Current Assets and $150,000 in Current

question 56

Multiple Choice

A firm has $600,000 in current assets and $150,000 in current liabilities.Which of the following is correct if it uses cash to pay off $50,000 in accounts payable?

• A)current ratio will increase to 5.0.
• B)net working capital will increase to $500,000.
• C)current ratio will decrease.
• D)net working capital will not change.

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Definitions:

Max Ringelmann

A French agricultural engineer known for his research into social psychology, particularly the Ringelmann effect which observes that individual productivity decreases as group size increases.

Social Psychology

Examination of the mechanisms through which humans understand, influence, and associate with others within a community framework.

Social Psychology

The scientific study of how individuals think, feel, and behave in social contexts and how the presence of others affects individual behavior.

Developmental Psychology

A branch of psychology that studies how people grow and change throughout their life span.