A Company with $60,000 in Current Assets and $40,000 in Current

question 31

Multiple Choice

A company with $60,000 in current assets and $40,000 in current liabilities pays a $1,000 current liability.As a result of this transaction,the current ratio and working capital will

• A)both decrease.
• B)both increase.
• C)remain the same and decrease,respectively.
• D)increase and remain the same,respectively.

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Definitions:

Direct Correlation

A relationship between two variables where an increase or decrease in one variable directly causes the same change in the second variable.

Complexity

The degree to which a project or task is complicated, often influenced by the number of interrelated components, variability, and uncertainty.

Positive Correlation

A relationship between two variables where an increase in one variable is associated with an increase in the other.

Assignable Causes

Sources of variation in a process or system that can be identified and usually eliminated, distinguished from random causes that are inherent in the system.