Which of the Following Is the Formula Used to Calculate

question 27

Multiple Choice

Which of the following is the formula used to calculate the debt ratio?

• A) Total Equity/Total Liabilities.
• B) Total Liabilities/Total Equity.
• C) Total Liabilities/Total Assets.
• D) Total Assets/Total Liabilities.
• E) Total Equity/Total Assets.

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Definitions:

Debit

An entry on the left side of an account, indicating an increase in assets or expenses or a decrease in liabilities, equity, or income.

Salary Expense Account

An account that tracks the total amount paid to employees for services rendered during a specific period.

Credit Entries

Accounting entries that increase liabilities or decrease assets, typically reflecting incoming payments or the granting of credit to a customer.

Transactions

Financial activities or events that affect the financial position of the company.