If a Firm Capitalizes a Lease Instead of Treating the Lease

question 30

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 to: $$\begin{array} { | l | l | l | } \hline & \text { Current Ratio } & \text { Debt-to-Equity Ratio } \\\hline \text { A) } & \text { Increase } & \text { Increase } \\\hline \text { B) } & \text { No effect } & \text { Increase } \\\hline \text { C) } & \text { No effect } & \text { Decrease } \\\hline \text { D) } & \text { Decrease } & \text { Increase } \\\hline\end{array}$$

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

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Definitions:

Critical Periods

Specific times during development when certain skills or abilities are most easily learned, and the brain is especially sensitive to external influences.

Teratogen

Any agent that can disturb the development of an embryo or fetus, which may cause a birth defect.

Responsive

Being quick to react or respond appropriately to changes or requests, showing sensitivity to the needs or feelings of others.

Highly Active Fetus

A term used to describe a fetus that shows more frequent or vigorous movement in the womb than typically observed.