The Debt Ratio Is Calculated as Follows: Total Assets Divided

question 37

True/False

The debt ratio is calculated as follows: total assets divided by total liabilities.

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Definitions:

Journalize

The process of recording business transactions in the journal as part of the accounting cycle.

Transactions

Financial events that result in changes to the financial position of a company, such as sales, purchases, and payments.

Equipment

Long-term assets that are used in the production of goods and services; these are tangible in nature.

Accounts Receivable

Obligations of customers to pay a company for goods or services that have been dispensed but remain unpaid.