If the current ratio is 2,the payment of a cash dividend,which was recorded as a liability on the date of declaration,will result in which of the following?
A)An increase in the current ratio.
B)A decrease in the current ratio.
C)No effect on the current ratio.
D)A decrease in the cash coverage ratio

Question

Quizplus · Accepted Answer

The current ratio increases because the decrease in current liabilities (the denominator) is greater relative to the decrease in current assets (the numerator).

If the Current Ratio Is 2,the Payment of a Cash