Which of the following would result in an increase in the current ratio, but not necessarily the acid-test ratio?

A) Increase in current assets.

B) Increase in quick assets.

C) Decrease in current liabilities.

D) Decrease in current assets.

Answer: A

The mixture of liabilities and stockholders' equity a business uses is called its:

A) Bond contract.

B) Carrying value.

C) Capital structure.

D) Accounting equation.

Answer: C

Which of the following is not a true statement?

A) Companies that are believed to have high bankruptcy risk generally receive low credit ratings and must pay a higher interest rate for borrowing.

B) As a company's level of debt increases, the risk of bankruptcy increases.

C) Interest expense incurred when borrowing money, as well as dividends paid to stockholders, are both tax-deductible.

D) The mixture of liabilities and stockholders' equity a business uses is called its capital structure.

Answer: C