Which of the Following Transactions Would Result in an Increase

question 39

Multiple Choice

Which of the following transactions would result in an increase in the current ratio?

• A)Collection of cash from an account receivable.
• B)Selling shares of stock to stockholders in exchange for cash.
• C)Purchasing a building with cash.
• D)Declaration of a cash dividend by the board of directors.

---

Definitions:

Current Assets

Assets that are expected to be converted into cash, sold or consumed within one year or the operating cycle, whichever is longer.

Current Liabilities

Financial obligations or debts that a company is expected to pay within one year or within its normal operating cycle, whichever is longer, including accounts payable, short-term loans, and accrued expenses.

Operating Activities

Business activities related directly to the production, sale, and delivery of a company's products and services, generating the primary revenue streams.

Income Statement

A financial statement that reports a company's financial performance over a specific period, detailing revenues, expenses, and profits or losses.