A is corrent. If current assets exceed current liabilities prior to this payment, the current ratio is greater than 1. Subtracting an equal amount from both the numerator and the denominator of a fraction which is greater than 1 will increase the fraction. Working capital would not be affected because both cash (a current asset) and payables (a current liability) are decreased.
B is incorrect. If current assets exceed current liabilities prior to this payment, the current ratio is greater than 1. Subtracting an equal amount from both the numerator and the denominator of a fraction which is greater than 1 will increase the fraction. Working capital would not be affected because both cash (a current asset) and payables (a current liability) are decreased.
B is incorrect. If current assets exceed current liabilities prior to this payment, the current ratio is greater than 1. Subtracting an equal amount from both the numerator and the denominator of a fraction which is greater than 1 will increase the fraction. Working capital would not be affected because both cash (a current asset) and payables (a current liability) are decreased.
D is incorrect. If current assets exceed current liabilities prior to this payment, the current ratio is greater than 1. Subtracting an equal amount from both the numerator and the denominator of a fraction which is greater than 1 will increase the fraction. Working capital would not be affected because both cash (a current asset) and payables (a current liability) are decreased.
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