Multiple Choice
Desktop Co.presently has a current ratio of 1.2 to 1 and an acid-test ratio of 0.8 to 1.What will be effect of prepaying next year's office rent of $50,000?
A) No effect on either the company's current ratio or its acid-test ratio.
B) No effect on the company's current ratio but will decrease its acid-test ratio.
C) A decrease in both the company's current ratio and its acid-test ratio.
D) An increase in both the company's current ratio and its acid-test ratio.
Correct Answer:
Verified
Correct Answer:
Verified
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