All of the Following Statements Regarding the Ratio of Liabilities

question 67

Multiple Choice

All of the following statements regarding the ratio of liabilities to owner's equity are true except:

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

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Definitions:

Hypotheses

Propositions made as a basis for reasoning, without the assumption of their truth, often used as starting points for further investigation.

Horney

Refers to Karen Horney, a German psychoanalyst known for her theories on neurotic personality development and the concept of basic anxiety.

Real Self

A person's authentic identity, reflecting their true personality, values, and beliefs, distinct from roles played in conformity to societal expectations.

Self-Realization

The fulfillment of one's talents and potentialities, especially considered as a drive or need present in everyone.