A Company Has an Assets-To-Liabilities Ratio of 3:2 and Total

question 42

Multiple Choice

A company has an assets-to-liabilities ratio of 3:2 and total assets worth $6 million. What is its owners' equity?

• A) $1 million
• B) $2 million
• C) $3 million
• D) $9 million
• E) $12 million

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Definitions:

Manufacturing Overhead

Costs, other than direct materials and direct labor costs, that are incurred in the manufacturing process.

Factory Overhead

encompasses all indirect costs associated with manufacturing operations, including utilities, maintenance, and factory manager salaries.

Administrative Expenses

Expenses related to the general operation of a business, such as salaries of executive officers and costs of general services.

Selling Expenses

Costs incurred directly and indirectly in selling products or services, including advertising, sales commissions, and store operations.