If a Company Converts a Short-Termnote Payable into a Long-Term

question 188

Multiple Choice

If a company converts a short-termnote payable into a long-term note payable,what would be the effect of this transaction?

• A) A decrease in working capital and an increase in the current ratio.
• B) A decrease in both working capital and the current ratio.
• C) A decrease in both the current ratio and the acid-test ratio.
• D) An increase in both working capital and the current ratio.

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