The Purchase of Land for Cash Would

question 66

Multiple Choice

The purchase of land for cash would:

• A)increase total assets.
• B)decrease stockholders' equity.
• C)increase the total debits on the trial balance.
• D)have no effect on total assets.

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Definitions:

Debt Ratio

The debt ratio is a financial ratio that compares a company's total debt to its total assets, indicating the proportion of a company's funding that comes from debt.

Total Assets

Total assets refer to the sum of all current and non-current assets owned by a company, reflecting the total resources available for use.

Total Liabilities

Total liabilities refer to the sum of all financial obligations a company owes to outside parties, including loans, accounts payable, and mortgages.

Prepaid Insurance

An asset account that reflects payments made for insurance services before the coverage period.