Before the Marvin Company issued $20,000 of long- term notes (due more than a year from the

Question:

Before the Marvin Company issued $20,000 of long- term notes (due more than a year from the date of issue) in exchange for a like amount of accounts pay- able, its current ratio was 2:1 and its acid-test ratio was 1:1. Will this transaction increase, decrease, or have no effect on the current ratio and acid-test ratio? What would be the effect on the equity ratio?

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