If the Liabilities of a Company Increased by $55,000 During

question 39

Multiple Choice

If the liabilities of a company increased by $55,000 during a month and the stockholders' equity decreased by $21,000 during that same month,did assets increase or decrease and by how much?

• A)$34,000 increase.
• B)$55,000 increase.
• C)$34,000 decrease.

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations using its current assets.

Short-Term Note Payable

A debt obligation due within one year or within the normal operating cycle of the business, used to finance short-term financing needs.

Receivables Turnover Ratio

A financial metric used to assess how efficiently a company collects cash from its credit sales by dividing total credit sales by the average accounts receivable.

Payments Quickly

Payments quickly refers to the process of settling financial transactions or obligations in a brief period of time, enhancing liquidity and cash flow management.