The Asset-To-Debt Ratio Compares Total Assets with Total Liabilities and Is

question 149

True/False

The asset-to-debt ratio compares total assets with total liabilities and is a broad measure of a household's financial liquidity.

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Definitions:

Normal Balance

The side (debit or credit) of an account that is typically increased. For assets and expenses, it's debit; for liabilities, equity, and income, it's credit.

Account

A record that keeps track of all financial transactions related to an asset, liability, equity, revenue, or expense.

Increases

The action or process of becoming larger in quantity, size, amount, or degree in a financial or numerical context.

Asset Account

An account that represents a resource owned or controlled by a business, expected to provide future economic benefits.