A company with $70,000 in current assets and $50,000 in current liabilities pays a $1,000 current liability. As a result of this transaction, the current ratio and working capital will

A) both decrease
B) both increase
C) increase and remain the same, respectively
D) remain the same and decrease, respectively

Current Ratio

A financial metric that measures a company's ability to pay off its short-term liabilities with its short-term assets, indicating liquidity.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity available to run its day-to-day operations.

Current Liabilities

Obligations that are due within one year or within the normal operating cycle of the business, whichever is longer.