Use the Information on January 1,Year 1 to Determine the Effect

Multiple Choice

Use the information on January 1,Year 1 to determine the effect of the following entry on the current ratio of Menendez Company:

How will this transaction affect the current ratio?

A) It have no effect on the current ratio.
B) It will cause the current ratio to increase.
C) It will cause the current ratio to decrease.
D) It will potentially affect the current ratio,but the direction of the change cannot be determined without more information.