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:

Flint

A hard, sedimentary cryptocrystalline form of the mineral quartz, historically used to make tools and weapons due to its ability to be chipped into sharp edges.

Farming Populations

Communities or groups of people primarily engaged in agricultural activities and the cultivation of food and crops.

Fertility

The natural capability of giving life; in humans, it refers to the ability to reproduce.

Food Foragers

Individuals or groups who obtain food by collecting wild plants and hunting animals, rather than through agriculture or animal husbandry.