If the Firm's Current Ratio Exceeds 1:1 and the Firm

question 6

True/False

If the firm's current ratio exceeds 1:1 and the firm retires an account payable, the quick ratio increases.

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Definitions:

FASB

The Financial Accounting Standards Board, an organization responsible for establishing and improving standards of financial accounting and reporting in the U.S.

GAAP

Generally Accepted Accounting Principles, a collection of commonly-followed accounting rules and standards for financial reporting.

Sarbanes-Oxley

A U.S. law enacted in 2002 to protect investors from the possibility of fraudulent accounting activities by corporations, also known as the Sarbanes-Oxley Act.

Publicly Held Companies

Companies whose ownership is distributed among the general public through publicly traded shares or stocks.