Answer:
Correct answer is C, payment of accounts payable
Explanation:
Quick ration is computed by adding CASH & CASH EQUIVALENTS, SHORT TERM INVESTMENT AND CURRENT RECEIVABLES then divided by CURRENT LIABILITIES.
Payment of accounts payable involves 2 current accounts that is a deduction on cash and a deduction on accounts payable. A deduction on CASH and ACCOUNTS PAYABLE won't affect the quick ratio. See some illustration below.
Quick ratio is 1:1 (Cash + Accounts receivable + short term investments) / (Accounts payable + accrued expenses)
Cash $50
Accounts receivable $60
Short term investment $40
Total quick assets $150
Accounts payable $120
Accrued expenses $30
Total current liabilities $150
A payment of $20 to accounts payable will decrease cash by $20 and accounts payable by $20. Makes the quick assets decreased to $130 and current liabilities to $130. Quick assets will is be 1:1 ($130 / $130)
The transactions that will not affect the quick ratio of a company is Payment for accounts payable.
The quick ratio serves a measurement of a company's capacity to pay its current liabilities , even though she retains its inventory or obtain additional financing.
The quick ratio of a company can be affected by Inventory sold on credit and Cash purchase of equipment.
Learn more about quick ratio at:
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