If a Firm Capitalizes a Lease Instead of Treating the Lease

question 9

Multiple Choice

If a firm capitalizes a lease instead of treating the lease as an operating lease, the effect on the current ratio and the debt-to-equity ratio will be: $$\begin{array} { l c c } & \text { Current ratio } & \text { Debt-to-equity ratio } \\\text { A) } & \text { Increase } & \text { Increase } \\\text { B) } & \text { No effect } & \text { Increase } \\\text { C) } & \text { No effect } & \text { Decrease } \\\text { D) } & \text { Decrease } & \text { Increase }\end{array}$$

• A)Option A
• B)Option B
• C)Option C
• D)Option D

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Definitions:

Cognitive Psychologist

A professional in psychology who studies the mental processes such as perception, memory, thought, and problem-solving, and how they influence behavior.

Anxiety Disorder

A category of mental health disorders characterized by excessive fear, worry, and anxiety that is persistent and interferes with daily activities.

Illogical Thought Processes

Reasoning or thinking that lacks coherence and consistency, often leading to conclusions that are not supported by evidence or sound reasoning.

Behavioral Therapist

A practitioner who focuses on modifying maladaptive behaviors through reinforcement, punishment, and other learning principles.