Advanced Accounting Chapter 13 Review

One way a company can increase its current ratio is by increasing short-term liabilities.

• True

• False

If a company's interest coverage ratio is too low, banks may hesitate to loan additional funds to the company.

• True

• False

A permanent difference between net income and taxable income is also called a timing difference.

• True

• False

Cash must be presented separately from cash equivalents on financial statements.

• True

• False

When beginning and ending balances are shown on a financial statement, the ending balance for one period is equal to the beginning balance for the following period.

• True

• False

Market ratios tie together the financial statements and the stock market.

• True

• False

A business gets capital from two sources: (1) owners' investments and retained earnings and (2) loans.

• True

• False

The debt ratio will decrease if assets are increased by issuing more capital stock.

• True

• False

Companies must disclose comprehensive income either as a separate statement or as a part of the traditional income statement.

• True

• False

A permanent difference between net income and taxable income is one that will balance out over time.

• True

• False