Solved

Match Each Transaction to Its Effect on the Debt/equity Ratio

Question 2

Matching

Match each transaction to its effect on the debt/equity ratio You may use each choice more than once or not at all

Premises:
Acquired the use of equipment under a capital lease
Paid the interest portion of the payment on a capital lease
Paid the principal portion of the payment on a capital lease
Acquired the use of equipment under an operating lease
Payment required on an operating lease
Responses:
Increase in debt/equity ratio
Decrease in debt/equity ratio
Does not change debt/equity ratio

Correct Answer:

Acquired the use of equipment under a capital lease
Increase in debt/equity ratio
Paid the principal portion of the payment on a capital lease
Decrease in debt/equity ratio
Paid the interest portion of the payment on a capital lease
Increase in debt/equity ratio
Payment required on an operating lease
Increase in debt/equity ratio
Acquired the use of equipment under an operating lease
Does not change debt/equity ratio
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