Please Refer to the Following Information and Calculate the Debt

question 15

Multiple Choice

Please refer to the following information and calculate the debt ratio.(Round to two decimals.) $\begin{array}{|l|r|r|} \hline&{\text { Debit }} & \text { Credit } \\\hline \text { Cash } & \$ 6,000 \\\hline \text { Accounts receivable } & 2,000 \\\hline \text { Prepaid insurance } & 800 \\\hline \text { Land } & 40,000 \\\hline \text { Building } & 50,000 \\\hline \text { Accumulated depreciation } & & \$ 32,000 \\\hline \text { Accounts payable } & & 9,400 \\\hline \text { Wages payable } & & 4,000 \\\hline \text { Notes payable - short term } & & 3,200\\\hline\end{array}$

• A) 0.25
• B) 1.89
• C) 0.53
• D) 4.02

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Definitions:

Market Equilibrium

Market equilibrium occurs when the quantity demanded of a good matches the quantity supplied, leading to a stable market price where there is no tendency for it to change.

Price Drop

A decrease in the cost of goods or services in the market, often due to supply and demand factors, competition, or other economic elements.

Producer Surplus

The variance between the minimum amount producers are prepared to take for a product or service and the actual price they obtain in the marketplace.

Carpentry Work

The craft or activity of cutting, shaping, and installing wood for buildings, furniture, or other structures.