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1. Assume a company has a current ratio that is greater than 1. Which of the following transactions will reduce the company's current ratio?

A) Selling office equipment at book value.

B) Paying a cash dividend already declared.

C) Borrowing by taking out a short-term loan.

D) Selling equipment at a loss.

2. The market price of XYZ Company's common stock dropped from $25 to $21 per share. The dividend paid per share remained unchanged. The company's dividend payout ratio would:

A) increase.

B) decrease.

C) be unchanged.

D) impossible to determine without more information.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9988373

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