Assuming That the Current Ratio Was 1

question 41

Multiple Choice

Assuming that the current ratio was 1.6 times and the quick ratio was 1.4 times before this transaction,the entry to record the payment of a previously declared and recorded cash dividend will

• A)increase the current ratio and the quick ratio.
• B)decrease the current ratio and the quick ratio.
• C)increase the current ratio but have no effect on the quick ratio.
• D)have no effect on the current ratio or the quick ratio.

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Definitions:

Merchandise

Products or goods that a company holds for the purpose of selling to customers.

Terms

The conditions and stipulations outlined in an agreement or contract, specifying the obligations, rights, and responsibilities of each party involved.

Cost

Refers to the amount of money incurred to produce or purchase goods or services.

Defective Motor

A motor that fails to operate within its specified performance criteria due to faults in design, material, or workmanship.