If Total Assets Go Down and Total Liabilities Go Up

question 3

Multiple Choice

If total assets go down and total liabilities go up, the current ratio:

• A) remains the same.
• B) decreases.
• C) increases.
• D) cannot be determined from the information given.
• E) is not affected at all by these changes.

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Definitions:

Statute of Frauds

A rule of law mandating that specific contract categories must be documented and signed in order to be legally binding.

Writing Requirement

The legal necessity for certain contracts to be in writing in order to be enforceable, such as real estate transactions.

Reliance

Dependence or trust in something or someone for support or to fulfill needs.

Subdivision

The act of dividing land into plots or pieces that may be developed, sold, or otherwise used separately.