All of the Following Statements Regarding the Ratio of Liabilities

question 105

Multiple Choice

All of the following statements regarding the ratio of liabilities to owner's equity are true except

• A) a ratio of 1 indicates that liabilities equal owner's equity
• B) corporations can use this ratio but substitute total stockholders' equity for total owner's equity
• C) the higher this ratio, the better able a business is to withstand poor business conditions and pay creditors
• D) the lower this ratio, the better able a business is to withstand poor business conditions and pay creditors

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Definitions:

Cultural Eutrophication

The process by which water bodies become overly enriched with nutrients due to human activity, leading to excessive growth of algae and subsequent environmental problems.

Phosphate Detergents

Cleaning products that contain phosphorus compounds, which, when released into natural water bodies, can cause eutrophication and harm aquatic life.

Input Control

strategies or methods used to manage the amount of inputs (such as water, nutrients, pesticides) in agricultural systems to minimize environmental impact.

Phosphate Detergents

Synthetic cleaning products that contain phosphate compounds, which can cause environmental issues when they enter water bodies.