Fullerton Co If Fullerton Uses Cash of $10,000 to Pay a Current

Multiple Choice

Fullerton Co.has the following information from its accounting records: $\begin{array}{lr}\text { Current assets } & \$ 80,000 \\\text { Total assets } & 200,000 \\\text { Current liabilities } & 40,000 \\\text { Total liabilities } & 120,000\end{array}$ If Fullerton uses cash of $10,000 to pay a current liability,its:

A) current ratio increases and its debt-to-assets ratio increases.
B) current ratio increases and its debt-to-assets ratio decreases.
C) current ratio decreases and its debt-to-assets ratio increases.
D) current ratio decreases and its debt-to-assets ratio decreases.