Solved

Match Each Transaction to the Effect That Each Transaction Would

Question 108

Matching

Match each transaction to the effect that each transaction would have on the current and debt/equity ratios, You may use each choice more than once or not at all.

Premises:
Equipment is purchased by incurring a long-term note payable and paying the balance in cash
Paid for transportation of equipment shipped from a supplier
Depreciated the equipment during the first year of use
Paid for lubrication and periodic maintenance of the equipment
Sold the equipment, receiving more money than its book value
Responses:
Decreases current ratio
Increases current ratio
Decreases debt/equity ratio
Increases debt/equity ratio

Correct Answer:

Equipment is purchased by incurring a long-term note payable and paying the balance in cash
Paid for transportation of equipment shipped from a supplier
Depreciated the equipment during the first year of use
Paid for lubrication and periodic maintenance of the equipment
Sold the equipment, receiving more money than its book value
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