Choose the Correct Statement: the Debt Ratio

question 14

Multiple Choice

Choose the correct statement: the debt ratio:

• A)shows the percentage of assets which are funded by debt finance
• B)shows the percentage of assets which are funded by equity finance
• C)shows the percentage of liabilities which are funded by debt finance
• D)shows the percentage of liabilities which are funded by equity finance

Identify the proper inclusion or exclusion of goods in transit, consigned goods, and goods out on consignment in inventories.

Apply concepts of purchase discounts, purchase returns, and allowances in inventory accounting.

Understand the legal and accounting aspects of FOB shipping point and FOB destination terms.

Differentiate between variable costs (e.g., freight-in costs, production supervisory salaries) that contribute to inventory valuation and those that do not (e.g., freight-out costs, selling costs).

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Definitions:

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenues.

Beginning Total Assets

The total value of all assets owned by a company at the start of a financial period.

Ending Total Assets

Ending Total Assets refer to the total value of all assets owned by a company at the end of a financial reporting period.

Return on Total Assets

Return on total assets (ROTA) is a financial metric that measures a company's profitability in relation to its total assets, indicating how efficiently a company uses its assets to generate profit.