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Match Each Transaction to the Effect on the Debt/equity Ratio

Question 103

Matching

Match each transaction to the effect on the debt/equity ratio

Premises:
Amortized the discount of the long-term note payable
A portion of long-term debt is paid
Accrued salaries at yearend
Paid payroll taxes which were accrued last month
Paid a bonus amounting to 5% on reported income to the CEO that was previously accrued
Paid costs associated with warranties that were previously accrued
Paid taxes which were accrued
Accrued income taxes at yearend
Accrued estimated coupon redemptions
Responses:
Increase in debt/equity ratio
Decrease in debt/equity ratio
Does not change debt/equity ratio

Correct Answer:

Amortized the discount of the long-term note payable
A portion of long-term debt is paid
Accrued salaries at yearend
Paid payroll taxes which were accrued last month
Paid a bonus amounting to 5% on reported income to the CEO that was previously accrued
Paid costs associated with warranties that were previously accrued
Paid taxes which were accrued
Accrued income taxes at yearend
Accrued estimated coupon redemptions
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