Which of the Following Transactions Would Result in a Decrease

question 119

Multiple Choice

Which of the following transactions would result in a decrease in the current ratio?

• A)Collection of cash from an account receivable.
• B)Selling shares of stock to stockholders in exchange for cash.
• C)Purchasing a delivery vehicle by signing a long-term note payable.
• D)Declaration of a cash dividend by the board of directors.

Understand the behavior of fixed and variable costs in relation to production and sales decisions.

Understand the concept and application of financial structure leverage ratios.

Grasp the benefits and risks of financial leverage for a company.

Recognize the importance of customer loyalty and cost control in company strategies.

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Definitions:

Tax Rate

The metric used to figure out the tax obligation of individuals and corporate entities.

Discount Rate

The interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility.

Initial Cost

The total expense incurred to acquire an asset or product, including the purchase price and all related fees and taxes, but excluding any subsequent maintenance or operational costs.

Cash Inflows

Money being received by a business or individual, from various sources like sales, investments, or loans.