The Effect of Setting Off on the Gearing Ratio of the Reporting

question 18

Multiple Choice

The effect of setting off on the gearing ratio of the reporting entity is to:

• A) Increase it if the net amount is a liability.
• B) Increase it if the net amount is an asset.
• C) Decrease it.
• D) Leave it unchanged.
• E) None of the given answers.

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Definitions:

Government Securities

Financial instruments issued by a government to finance its expenditures, including bonds, bills, and notes.

Commercial Banking System

A network of financial institutions that accept deposits, offer loans, and provide other financial services to the public and businesses.

Deposits with the Fed

Funds that commercial banks and other financial institutions place in their accounts with the Federal Reserve.

U.S. Government Securities

Financial instruments issued by the U.S. government to raise funds, including Treasury bonds, bills, and notes, considered low-risk investments.