Question
Daley, Inc. is consistently profitable. Its financial relationships as of January 1, 20X1 were: Current ratio 2 to 1 Long term debt divided by Total
Daley, Inc. is consistently profitable. Its financial relationships as of January 1, 20X1 were:
| Current ratio | 2 to 1 | |
| Long term debt divided by Total Assets | 0.5 |
On February 1, 20X1, Daley issued $100,000 of long-term debt for cash. What is the effect on these ratios?
| Long-term debt divided by Total assets increases; current ratio decreases | ||
| Long-term debt divided byTotal assets increases; current ratio increases | ||
| Long-term debt divided by Total assets decreases; current ratio decreases | ||
| Long-term debt divided by Total assets decreases; current ratio increases
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
International Auditing Standards In The United States Comparing And Understanding Standards For ISA And PCAOB
Authors: Asokan Anandarajan
1st Edition
1606496123, 978-1606496121
