A Company's Current Ratio and an Acid-Test Ratio Are Both

question 123

Multiple Choice

A company's current ratio and an acid-test ratio are both greater than 1. Payment of an account payable would:

• A)increase the current ratio but the acid-test ratio would not be affected.
• B)increase the acid-test ratio but the current ratio would not be affected.
• C)increase both the current and acid-test ratios.
• D)decrease both the current and acid-test ratios.

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Definitions:

Indifference Schedule

A representation of combinations of two goods between which a consumer is indifferent because they provide the same level of utility.

Substitution

The act of replacing one item with another, often referring to the economic principle where consumers switch between similar goods in response to changes in price or income.

Indifference Curve

A graph representing combinations of two goods between which a consumer is indifferent, showing preferences and trade-offs.

Total Utility

The total satisfaction received from consuming a certain amount of a good or service.