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

question 90

Multiple Choice

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

Conscientiousness

A personality trait characterized by diligence, carefulness, thoroughness, and a desire to do a good job, often associated with high performance in workplace settings.

Paying Attention

The act of focusing one's mind actively on a particular stimulus or task, maintaining a state of awareness towards specific details or information.

Tolerance

The willingness or ability to accept and respect differences in opinion, behavior, or beliefs without being judgmental.

Uncertainty

A state or condition where there is a lack of certainty, predictability, or clear understanding about an outcome or situation.