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##### Chapter 2 Recording Business Transactions

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Question;1) The debt ratio shows the proportion of;assets financed with debt.;2) Grace Paper Company has a debt ratio of;25%, which means that 75% of the assets are financed by creditors of the;corporation.;3) The higher the debt ratio, the lower;the risk.;4) Which of the following is the correct;formula to calculate the debt ratio?;A) Debt ratio = Total liabilities ? Total;assets;B) Debt ratio = Total liabilities + Total;assets;C) Debt ratio = Total liabilities - Total;assets;D) Debt ratio = Total liabilities ? Total;assets;5) The percentage of assets that are;financed with liabilities can be calculated using the ________.;A) accounting equation;B) debt ratio;C) journal;D) ledger;6) The ability of a company to repay its;liabilities can be determined from its ________.;A) bankers;B) creditors;C) debt ratio;D) journal;7) Mitchell Florists & Co. reported;assets of \$1,000 and equity of \$350. What is its debt ratio?;A) 65%;B) 35%;C) 100%;D) 70%

Paper#55129 | Written in 18-Jul-2015

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