Question

If a company with a current ratio of 2.0 pays $2,000 of its salaries payable, then its current ratio will change, but not enough information is provided to determine if it will increase or decrease. decrease. remain the same increase. D Question 12 2 pt Under the allowance method of accounting for bad debts, the recognition of bad debt expense increases current assets and decreases net income. decreases current assets and increases net income. increases current assets and net income. decreases current assets and net income.

Answer 1

Question 11:

Answer: Remain the same

Explanation:

Current ratio = Current assets ÷ Current liabilities

Present current ratio is 2.

If Company pays $2,000 of its salaries payable, Then Cash (current asset) decreases and Salaries payable (Current liabilities) decrease.

Hence, No change in current ratio because both current assets and current liabilities are decreased with same amount.

Question 12:

Answer: Decrease current assets and net income

Explanation:

It's deductible from 'Accounts receivable'. So that current assets decreases. And

Bad debt expense is an expense so that it decrease the net income.