Barron Co'S Current Ratio Is 2:1

question 37

Multiple Choice

Barron Co.'s current ratio is 2:1.Which of the following transactions would normally increase Barney's current ratio?

• A) Purchasing inventory on account
• B) Borrowing money by signing a long-term note
• C) Collecting an account receivable
• D) Purchasing land for cash

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Definitions:

Investment

The act of allocating resources, usually money, with the expectation of generating an income or profit.

Operating Activity

Activities that involve the core business operations of a company, such as selling, managing, and producing goods and services.

Paying Interest

The act of providing compensation to lenders for the use of borrowed money, usually calculated as a percentage of the principal amount.

Lenders

Individuals or institutions that provide funds to others under the agreement that the funds will be repaid, typically with interest.