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

question 116

Multiple Choice

A firm has $600,000 in current assets and $150,000 in current liabilities.Which of the following is correct if they use 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:

Fatal Wounds

Injuries severe enough to lead to death.

Ownership

The legal right or title to possess property, including the rights to use, sell, or transfer it.

Exculpatory Clause

A contract term designed to release one of the parties from liability for harm or wrongdoing, transferring the risk to another party.

Enforceable

A term describing a legal agreement or contract that is valid and can be upheld and compelled by law or court order.