Assume the Current Ratio Is 2 to 1

question 170

Multiple Choice

Assume the current ratio is 2 to 1.Payment on accrued salaries payable would cause the current ratio to

• A)increase.
• B)decrease.
• C)be unchanged since the effects offset one another.
• D)be unchanged since it has no impact on any current accounts.

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Definitions:

Short-term Note Payable

A debt obligation payable within a short period, typically one year or less, representing borrowed funds that need to be repaid.

Accounting Issues

Challenges and considerations in the field of accounting, including standards, practices, and the handling of specific financial situations.

Times Interest Earned

A financial ratio that measures the ability of a business to meet its interest payments based on current earnings.

Interest Expense

The cost incurred by a company for borrowed funds, including loans, bonds, and lines of credit.