If a Company Has an Acid-Test Ratio of 1

Multiple Choice

If a company has an acid-test ratio of 1.2, what respective effects will the borrowing of cash by short-term debt and the collection of accounts receivable have on the ratio? Short-term Collection of
Borrowing Receivable

A) Increase No effect
B) Increase Increase
C) Decrease No effect
D) Decrease Decrease