Quiz Ch 09 – T/F Leverage Ratio Interpretation
Financial Accounting
Thomas, Tietz, and Harrison
12th Edition
If the leverage ratio is 1.0, it signifies that the total liabilities are equal to the total assets.
If the leverage ratio is 1.0, it signifies that the total liabilities are equal to the total assets.
When the market interest rate is higher than the stated interest rate, the bonds will be sold at a discount.
In an operating lease, the lessee gains ownership of the leased asset at the lease term’s end.
The Premium on Bonds Payable will be fully amortized to zero by maturity, resulting in the bonds’ carrying value equaling the bond’s face value.
When bonds are issued at a premium, their carrying value exceeds the face value during all interest periods before maturity.
The Premium on Bonds Payable account represents a liability for the issuer.
Operating leases create a liability for the lessee, which must be recorded on their balance sheet due to the lease term being longer than one year.
The times-interest earned ratio is negative when net income is positive.
Long-term debt with maturities within one year of the balance sheet date is disclosed separately from long-term debt.
The lessee assumes the risks and rewards of owning the leased asset in operating leases.