mnieman

bez Wrote:
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> Doesn't collecting cash from A/R account means
> increasing cash in cash account ?
> thats makes current ratio unchanged and increase
> in quick ratio!
> Gee, hope i am right, it sucks if i get this one
> wring at this point !


You are right that the current ratio remains unchanged, but the quick ratio also remains unchanged since receivables are also included in the quick ratio. You are just transferring the accounts receivable money (a current asset) to cash (another current asset).



Edited 1 time(s). Last edit at Thursday, December 2, 2010 at 10:56PM by CFAcountry.