If the Ratio of Total Liabilities to Total Assets Is

question 49

Multiple Choice

If the ratio of total liabilities to total assets is 0.5,long-term liabilities are $3,000,and equity is $5,000,then::

• A) you know that current liabilities must be $ 2,000.
• B) you know that current assets must be $400.
• C) you know that retained earnings must be $800.
• D) you know that preferred stock must be $400.

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Definitions:

Accounting Treatment

The methodology and guidelines used to represent an accounting process or transaction in the financial statements, according to principles of accounting standards.

Comparability

An accounting principle that allows financial information to be compared across different periods or companies for analysis.

Financial Information

Data related to the financial status and activities of an individual, company, or organization.

Similar Manner

Describes actions or processes conducted in a way that is analogous or comparable to another, often used to ensure consistency.