All else unchanged, which of the following is true when a ﬁrm sells a ﬁxed asset on credit (an account receivable is created)?
A) The current ratio goes up but the quick ratio is unchanged.
B) The current ratio goes up but the quick ratio declines.
C) The quick ratio goes up but the current ratio is unchanged.
D) The quick ratio goes up but the current ratio declines.
E) The quick ratio and the current ratio both go up.

Question

Quizplus · Accepted Answer

The current ratio and the quick ratio both go up because the firm's total assets increase (due to the creation of the account receivable) and its current liabilities remain unchanged.

All Else Unchanged, Which of the Following Is True When