Desktop Co

question 107

Multiple Choice

Desktop Co.presently has a current ratio of 1.2 to 1 and an acid-test ratio of 0.8 to 1.Prepaying next year's office rent of $50,000 will:

• A) have no effect on either the company's current ratio or its acid-test ratio.
• B) have no effect on the company's current ratio but will decrease its acid-test ratio.
• C) decrease the company's current ratio and decrease its acid-test ratio.
• D) increase the company's current ratio and increase its acid-test ratio.

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