Which of the Following Will Reduce the Liquidity of a Firm

question 128

Multiple Choice

Which of the following will reduce the liquidity of a firm? An increase in

• A) short-term notes payable.
• B) accounts payable.
• C) current assets.
• D) both A and B.

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Definitions:

Bank Statement

A monthly report from a bank that shows deposits recorded, checks cleared, other debits and credits, and a running bank balance. This same information is available on a daily basis from the bank’s online banking site.

Credit Terms

The conditions under which credit is extended by a seller to a buyer, including payment deadline, discount for early payment, and service charge for late payment.

Annual Basis

Annual basis refers to any financial calculation or performance measurement taken over or normalized for a single year.

Outstanding Checks

Checks that have been issued and recorded in the issuing party's records but have not yet been cashed or cleared by the bank.