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    CAREACCOUNTING's Avatar
    CAREACCOUNTING Posts: 4, Reputation: 1
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    #1

    Sep 29, 2006, 04:28 PM
    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
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #2

    Sep 29, 2006, 10:54 PM
    What do YOU think the answer is? And WHY?
    yungrockr's Avatar
    yungrockr Posts: 2, Reputation: 2
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    #3

    Mar 5, 2007, 08:33 AM
    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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