Westcott, Inc. has the following information from its accounting records: If Westcott uses cash of $5,000 to pay a current liability, its:
A) current ratio increases and its debt-to-assets ratio increases
B) current ratio increases and its debt-to-assets ratio decreases
C) current ratio decreases and its debt-to-assets ratio increases
D) current ratio decreases and its debt-to-assets ratio decreases

Question

Westcott, Inc. has the following information from its accounting records:  If Westcott uses cash of $5,000 to pay a current liability, its:
A) current ratio increases and its debt-to-assets ratio increases 
B) current ratio increases and its debt-to-assets ratio decreases 
C) current ratio decreases and its debt-to-assets ratio increases 
D) current ratio decreases and its debt-to-assets ratio decreases

Quizplus · Accepted Answer

The Answer of Westcott, Inc. has the following information from its accounting records:  If Westcott uses cash of $5,000 to pay a current liability, its:
A) current ratio increases and its debt-to-assets ratio increases 
B) current ratio increases and its debt-to-assets ratio decreases 
C) current ratio decreases and its debt-to-assets ratio increases 
D) current ratio decreases and its debt-to-assets ratio decreases