Assuming That the Current Ratio Was 1

question 11

Multiple Choice

Assuming that the current ratio was 1.6 times and the quick ratio was 1.4 times,the entry to record the payment of a previously declared and recorded cash dividend will

• A) decrease the current ratio and the quick ratio.
• B) have no effect on the current ratio or the quick ratio.
• C) increase the current ratio and the quick ratio.
• D) increase the current ratio but have no effect on the quick ratio.

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Definitions:

Straight-Line

A method of calculating depreciation of an asset, which allocates an equal amount of depreciation to each year of the asset's useful life.

Sum-Of-Years' Digits

A depreciation method that accelerates the expense recognition, using a decreasing fraction of years remaining over the sum of the years' digits.

Double-Declining Balance

A method of accelerated depreciation which doubles the normal depreciation rate, reducing the asset's book value more quickly in its early years.

Salvage Value

The estimated residual value of an asset at the end of its useful life.