On Their Most Recent Balance Sheet, a Company Reports Total

question 13

Multiple Choice

On their most recent balance sheet, a company reports total assets of $8 million, common shares of $4 million, and retained earnings of $2 million.The debt-to-asset ratio is:

• A)0.25
• B)0.50
• C)0.75
• D)None of the above

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Definitions:

Adjusting Entry

A journal entry made at the end of an accounting period to update account balances before preparing financial statements, ensuring they reflect the true financial position.

Financial Statements

Financial reports that summarize the effects of events on a business.

Interest Note

A financial instrument that serves as a formal promise to pay interest in addition to the principal amount borrowed.

Small Companies

Businesses with a relatively small market share or workforce, often defined by specific criteria such as revenue, assets, or number of employees.