The Debt to Assets Ratio Is Computed by Dividing

question 34

Multiple Choice

The debt to assets ratio is computed by dividing

• A)long-term liabilities by total assets.
• B)long-term liabilities by average assets.
• C)total liabilities by total assets.
• D)total liabilities by average assets.

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Definitions:

Accumulated Depreciation

The total amount of depreciation expense that has been charged against a fixed asset since it was put into use, representing the wear and tear over time.

Contra-Asset Account

An account that offsets or reduces the balance of its related asset account, such as accumulated depreciation reducing the carrying value of fixed assets.

Liability Account

An accounting record that represents a company's legal debts or obligations that arise during business operations.

Cash Basis

An accounting method where revenue and expenses are recognized only when cash is exchanged.