Problem 1: A cash payment received from a customer's accounts receivable would be recorded as:
a) an increase in revenue
b) a decrease in liability
c) an increase in owner's equity
d) an increase in assets
Problem 2: Which of the following statements is false?
a) A company generally prefers to have a high debt ratio.
b) The current ratio measures the ability to pay current liabilities with current assets.
c) The debt ratio measures a business's ability to pay long-term liabilities with long-term assets.
d) A company generally prefers to have a high current ratio.
Problem 3: Payers attempt to create delays in the check clearing process. Recipients attempt to remove delays in the check clearing process. Performed legally, this is referred to as check kiting.
a) true
b) false