Which Statement Concerning Liabilities Is Incorrect

question 19

Multiple Choice

Which statement concerning liabilities is incorrect?

• A) The absolute value of liquidity ratios is usually more important than their trend over time.
• B) Borrowing to finance assets provides the potential for greater returns for owners but also means greater risk.
• C) A difference between accounts payable and bills payable is that the liability created with bills payable is evidenced by a bills payable or a promissory note.
• D) Leverage is the use of borrowed funds in an attempt to earn a return greater than the interest paid on the borrowings.

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