1. A) E) Accounting liquidity is defined as: the amount of cash the firm has B) the turnover ratio C) the ability of the assets to generate income D) the ease and quickness with which assets can be converted to cash none of the above. Debt is a contractual obligation that: A) requires the payout of residual flows to the holders of these instruments. B) requires a repayment of a stated amount and interest over the period. C) allows the bondholders to sue the firm if it defaults. D) Both a and b. E) Both b and c. 2. 3. Which of the following statements concerning the income statement is not true? A) It measures performance over a specific period of time. B) It determines after-tax income of the firm. C) It includes deferred taxes. D) It does not include depreciation. E) It treats interest as an expense