All of the Following Statements Regarding the Ratio of Liabilities

question 210

Multiple Choice

All of the following statements regarding the ratio of liabilities to stockholders' equity are true except

• A) a ratio of 1 indicates that liabilities equal stockholders' equity
• B) sole proprietorships can use this ratio but substitute total owner's equity for total stockholders' equity
• C) the higher this ratio, the better able a business is to withstand poor business conditions and pay creditors
• D) the lower this ratio, the better able a business is to withstand poor business conditions and pay creditors

Identify and distinguish between permanent and temporary accounts in the accounting cycle.

Apply knowledge of the periodic inventory system in financial transactions.

Analyze and interpret financial data to make informed business decisions.

Understand the closing process of accounts at the end of a fiscal period.

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Definitions:

Managers and Supervisors

Individuals within an organization responsible for overseeing the work of employees, making decisions, and ensuring that goals are met.

Laboratory Conditions Doctrine

A principle in legal or experimental contexts emphasizing the importance of controlled, predictable environments for the accuracy of outcomes or decisions.

Union Campaign

An organized effort by a labor union to gain membership, negotiate better terms for workers, or address issues affecting its members.

NLRB

The National Labor Relations Board is a federal agency responsible for enforcing U.S. labor laws regarding collective bargaining and handling complaints of unfair labor practices.