All of the Following Statements Regarding the Ratio of Liabilities

question 210

Multiple Choice

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

• A) a ratio of 1 indicates that liabilities equal stockholders' equity
• B) sole proprietorships can use this ratio but substitute total owner's equity for total stockholders' 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:

Perceptual Adaptation

The ability of the body to adjust to an environment by filtering out distractions and focusing on important elements.

Retinal Disparity

The slight difference in the visual images that reach each eye, leading to the perception of depth and three-dimensional structure.

Interposition

A visual cue for depth perception, where one object partly covers another, indicating the former is closer to the observer.

Relative Luminance

A measure of the amount of light that is emitted, passed through, or reflected from an object, normalized to a scale from zero (perfect black) to one (perfect white).