If a Company Made Extensive Use of Operating Leases to Finance

question 42

Multiple Choice

If a company made extensive use of operating leases to finance assets, what would be the effect on the debt-to-equity ratio?

• A)The debt-to-equity ratio would be understated.
• B)The debt-to-equity ratio would be overstated.
• C)The debt-to-equity ratio would not be affected.
• D)The effect depends on whether the ratio is above 1 or not.

Record and understand the effects of asset impairment, particularly goodwill impairment.

Understand and calculate depletion expense for natural resources.

Calculate and journalize depreciation, depletion, and amortization expenses.

Record the sale, disposal, and exchange of assets and comprehend the financial impact.

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