Where There Is a Deficit in Total Owners' Equity, the Ratio

question 49

True/False

Where there is a deficit in total owners' equity, the ratio of total liabilities to total assets will be greater than 1 to 1; e.g., 1.2 to 1.

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Definitions:

Refund Receipts

Documents that confirm the return of funds to a customer for returned goods or overpayment.

Double Entry Accounting

An accounting method where every transaction affects at least two accounts, involving equal and opposite entries to ensure the accounting equation remains balanced.

Journal Entry

A record that represents a single financial transaction in the books of accounts.

Computerized Accounting System

Software used by companies to manage their financial transactions, records, and reports electronically.