Assertion: An increase in accounts payable will increase a company's current ratio.
Reasoning: Accounts payable are considered a current liability and are included in the current assets and liabilities sections of the balance sheet.

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Both Assertion and Reasoning are true, and the Reasoning is the correct explanation of the
Assertion.

Both Assertion and Reasoning are true, but the Reasoning is not the correct explanation of the
Assertion.

Assertion is true, but the Reasoning is false.

Assertion is false, but the Reasoning is true.

answer is D.

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Detailed Solution

The Assertion is false because an increase in accounts payable will decrease a company's current ratio. Accounts payable are a current liability and are included in the current liabilities section of the balance sheet, which is the denominator of the current ratio. Therefore, an increase in accounts payable will increase the denominator and decrease the ratio. The Reasoning is true because accounts payable are included in the current liabilities section of the balance sheet.

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