What do current liabilities and current assets have in common? a) Current assets are claims against current liabilities. b) If current assets increase, then there will be a corresponding increase in current liabilities. c) Current liabilities and current assets are converted into cash. d) Current liabilities and current assets are those items that will be satisfied and converted into cash, respectively, in one year or one operating cycle, whichever is longer.
What do current liabilities and current assets have in common? a) Current assets are claims against current liabilities. b) If current assets increase, then there will be a corresponding increase in current liabilities. c) Current liabilities and current assets are converted into cash. d) Current liabilities and current assets are those items that will be satisfied and converted into cash, respectively, in one year or one operating cycle, whichever is longer.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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What do current liabilities and current assets have in common?
a) Current assets are claims against current liabilities.
b) If current assets increase, then there will be a corresponding increase in current
liabilities.
c) Current liabilities and current assets are converted into cash.
d) Current liabilities and current assets are those items that will be satisfied and
converted into cash, respectively, in one year or one operating cycle, whichever is
longer.
Expert Solution
Step 1
Current assets are the short term business assets that can be converted into cash within a year.
Current liabilities are short term liabilities that needs to be paid off within a year.
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