A Firm Has Total Assets of $50 Million and Owner's

question 52

Multiple Choice

A firm has total assets of $50 million and owner's equity of $40 million.What is the firm's debt ratio?

• A)70%
• B)50%
• C)30%
• D)20%

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Definitions:

Periodic Inventory System

An inventory accounting system where the inventory level is updated and the cost of goods sold is calculated at the end of a period, rather than after each sale.

Purchases Account

An account used in accounting to record the total cost of goods bought for resale during an accounting period.

Freight In

The cost of transporting goods into a business, usually included in the cost of inventory.