Which of the Following Is Considered a Good/safe Rule-Of-Thumb Debt

question 62

Multiple Choice

Which of the following is considered a good/safe rule-of-thumb debt ratio for businesses?

• A)0.8 or below
• B)0.6 or below
• C)1.0 or above
• D)1.5 or above

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Definitions:

Wage Expense

The total cost incurred by a company for the salaries and wages of its employees.

Withdrawals

Sums of money withdrawn by the business owner(s) for private expenses.

General Journal

A basic accounting record used to keep track of all business transactions not recorded in specialized journals.

Account Titles & Descriptions

Names and explanations assigned to individual accounts in the financial statements, reflecting the nature and type of transaction.