Cash purchase of inventory preserves current assets but reduces quick assets

Steps:

• Transaction decreases cash and increases inventory by equal amount.
• Total current assets remain unchanged, as cash loss offsets inventory gain.
• Current ratio (current assets / current liabilities) shows no change.
• Quick assets (cash + receivables + securities) decrease due to cash outflow; inventory excluded.
• Acid-test ratio ((quick assets) / current liabilities) decreases.

Why C is correct:

• Current ratio unchanged because net current assets stable; acid-test decreases as quick assets fall, per standard formulas.

Why the others are wrong:

• A: Current ratio unchanged, not decreased.
• B: Current ratio unchanged, not increased.
• D: Acid-test decreases, not increased.

Final answer: C