If Topeka Enterprises Has a Debt Ratio of 40 Percent

question 24

Multiple Choice

If Topeka Enterprises has a debt ratio of 40 percent, it means that for every $1 in ______, the firm has 40 cents in ______.

• A) owners' equity; liabilities
• B) owners' equity; assets
• C) assets; owners' equity
• D) assets; liabilities

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Definitions:

Credit Balance

The amount appearing on the credit side of a ledger, indicating the total credits exceed the total debits in an account.

Debit Balance

It is the remaining amount owing in an account after all debits and credits have been accounted for, typically found in asset and expense accounts.

Recorded By Credits

Recorded by Credits refers to accounting entries made on the credit side of an account, indicating an increase in liabilities, revenue, or equity, or a decrease in assets.

Decreases

A reduction in the quantity, size, or value of something.