Accounting for IGCSE & O level - Advanced Principles (Section 5 - No. 16)
How does an increase in accounts payable affect a company's current ratio, assuming all other factors remain constant?
Increases the current ratio
Decreases the current ratio
Has no impact on the current ratio
The impact depends on the size of the current assets
Paliwanag
Accounts payable is a current liability. Increasing it decreases the current ratio.