Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

9. Current Liabilities

Types of Liabilities

Financial Accounting

9. Current Liabilities

Types of Liabilities

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following transactions would most likely increase a company's leverage ratio?

Issuing new shares of common stock

Collecting outstanding accounts receivable

Paying off a portion of existing long-term debt

Issuing long-term bonds to finance new equipment

Previous problemNext problem

Verified step by step guidance

Understand the concept of leverage ratio: The leverage ratio measures the proportion of debt a company uses to finance its assets relative to equity. It is often calculated as Total Debt / Total Equity.

Analyze the impact of issuing new shares of common stock: Issuing new shares increases equity, which would decrease the leverage ratio since the denominator (equity) increases while debt remains unchanged.

Evaluate the effect of collecting outstanding accounts receivable: Collecting accounts receivable does not directly affect debt or equity, so it would not impact the leverage ratio.

Consider the impact of paying off a portion of existing long-term debt: Paying off debt reduces the numerator (total debt) in the leverage ratio formula, which would decrease the leverage ratio.

Examine the effect of issuing long-term bonds to finance new equipment: Issuing long-term bonds increases the company's debt, which raises the numerator (total debt) in the leverage ratio formula, thereby increasing the leverage ratio.