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problem: A firm’s debt ratio is 60%. This means that

[A] The firm has legal claims against only 40% of the assets.

[B] The firm has legal claims against only 60% of the assets.

[C] 40% of the assets were provided by shareholders.

[D] 60% of the assets were provided by shareholders.

[E] 60% of every sales dollar must be paid to the creditors.

problem2: Possible asset categories on a balance sheet include all of the following except

[A] Retained earnings

[B] Current assets

[C] Property, plant, and equipment

[D] Intangible assets

[E] Long-term investments

problem3: Expense should be included in the income statement in the period in which (hint: the matching principle applies here)

[A] The related revenue is subject to tax

[B] The related revenue is earned

[C] It is paid

[D] The related revenue is collected

[E] It is deductible for tax purposes

problem4: Comparing one firm’s liquidity to another is best accomplished by comparing

[A] Debt-to-asset ratio.

[B] Debt-to-equity ratio.

[C] Working capital.

[D] Current ratio.

[E] Gross profit.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M920612

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