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Home > Business & Careers > Accounting   »   current ratio

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Old Sep 29, 2006, 03:28 PM
CAREACCOUNTING
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current ratio
Barney co.'s current ratio is 2:1. Which of the following transactions would normally increase Barneys'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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Old Sep 29, 2006, 09:54 PM   #2  
CaptainForest
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What do YOU think the answer is? And WHY?
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Old Mar 5, 2007, 06:33 AM   #3  
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B- taking a long-term loan would increase the current ratio. Since the loan is a long term liability it is not calculated into the current ratio, however the newly received cash amount is.

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CaptainForest agrees: I agree. The answer is B.
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