Fullerton Co If Fullerton Uses Cash of $10,000 to Pay a Current

question 142

Multiple Choice

Fullerton Co.has the following information from its accounting records: $\begin{array}{lr}\text { Current assets } & \$ 80,000 \\\text { Total assets } & 200,000 \\\text { Current liabilities } & 40,000 \\\text { Total liabilities } & 120,000\end{array}$ If Fullerton uses cash of $10,000 to pay a current liability,its:

• A)current ratio increases and its debt-to-assets ratio increases.
• B)current ratio increases and its debt-to-assets ratio decreases.
• C)current ratio decreases and its debt-to-assets ratio increases.
• D)current ratio decreases and its debt-to-assets ratio decreases.

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