Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 81

Analyzing the impact of Transactions on the Quick Ratio
BSO, Inc., has liquid assets of $600,000 and current liabilities of $500,000, resulting in a quick ratio of 1.2. For each of the following transactions, determine whether the quick ratio will increase, decrease, or remain the same. Each item is independent.
a. Purchased $20,000 of new inventory on credit.
b. Paid accounts payable in the amount of $50,000.
c. Recorded accrued salaries in the amount of $100,000.
d. Borrowed $250,000 from a local bank, to be repaid in 90 days.