5. All liabilities that are not classified as currentliabilities are classified as long-term.
a. True b. False
6. The most obvious risk to bond investors is that a companywill fail and be unable to pay its debts.
a. True b. False
7. When a bond is issued at a discount, the interest expenseeach year is less than the cash payment for interest.
a. True b. False
8. In an operating lease, the lessee acquires the right to usean asset for only a limited period of time.
a. True b. False
9. A lease is accounted for as a capital lease if the lease termis 75% or more of the property's economic life.
a. True b. False
10. Most investors would prefer to see equity rather than debton the balance sheet.
a. True b. False
11. The asset leased under an operating lease requires thelessee to record depreciation expense.
a. True b. False
12. An investor views a high debt-to-equity ratio and a lowtimes interest earned as a favorable sign of a companyâs abilitiesto meet its long-term obligations
. a. True b. False
13. When the board of director's declares a cash or stockdividend, this action decreases Retained Earnings
. a. True b. False
14. Book value is a measure of the market value of thestock.
a. True b. False
15. The statement of cash flows summarizes the operating,investing, and financing activities of a business for a period oftime.
a. True b. False
5. All liabilities that are not classified as currentliabilities are classified as long-term.
a. True b. False
6. The most obvious risk to bond investors is that a companywill fail and be unable to pay its debts.
a. True b. False
7. When a bond is issued at a discount, the interest expenseeach year is less than the cash payment for interest.
a. True b. False
8. In an operating lease, the lessee acquires the right to usean asset for only a limited period of time.
a. True b. False
9. A lease is accounted for as a capital lease if the lease termis 75% or more of the property's economic life.
a. True b. False
10. Most investors would prefer to see equity rather than debton the balance sheet.
a. True b. False
11. The asset leased under an operating lease requires thelessee to record depreciation expense.
a. True b. False
12. An investor views a high debt-to-equity ratio and a lowtimes interest earned as a favorable sign of a companyâs abilitiesto meet its long-term obligations
. a. True b. False
13. When the board of director's declares a cash or stockdividend, this action decreases Retained Earnings
. a. True b. False
14. Book value is a measure of the market value of thestock.
a. True b. False
15. The statement of cash flows summarizes the operating,investing, and financing activities of a business for a period oftime.
a. True b. False
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