Question 1

If the total debits equal the total credits on the trial balance,the individual account balances will be error free.

Accepted Answer

Total debits can equal total credits on the trial balance;however,there still could be errors in individual account balances because an incorrect amount might have been recorded in an individual journal entry.

Question 2

Provide a definition of each of the follow accounting terms.

Accepted Answer

The answer of Provide a definition of each of the...

Question 3

What are two ways in which a company can improve its debt ratio?

Accepted Answer

The answer of What are two ways in which a...

Question 4

Baytown Paper Company has a debt ratio of 25%,which means that 75% of the assets are financed by creditors.

Accepted Answer

A debt ratio of 25% means that 25% of assets are financed with debt.

Question 5

The proportion of assets that are financed with debt can be calculated using the ________ ratio.

Accepted Answer

The debt ratio measures the proportion of a company's assets that are financed with debt, which is calculated by dividing total debt by total assets. Choice A (quick ratio) measures a company's liquidity, choice C (asset ratio) is not a commonly used financial ratio, and choice D (cash ratio) measures a company's ability to cover current liabilities with cash and cash equivalents.

Question 6

Durable Plastics Company had the following total assets,liabilities,and equity as of December 31.

What is the company's debt ratio as of December 31? (Round your percentage answer to two decimal places. )

Accepted Answer

A)Debt ratio = Total liabilities / Total assets
Debt ratio = $131,000 / $430,000 = 0.3047 or 30.47%

Question 7

Calculate the debt ratio using the following trial balance of Superior Instruments,Inc.as of December 31,2019.

Accepted Answer

The answer of Calculate the debt ratio using the following...

Question 8

Provide a definition of each of the follow accounting terms.

Accepted Answer

The answer of Provide a definition of each of the...

Question 9

Which of the following is assessed using the debt ratio?

Accepted Answer

The debt ratio measures the proportion of a company's total liabilities to its total assets, giving an indication of the risk of default or bankruptcy. It does not assess profitability, revenues, or net income.

Question 10

The debt ratio is one indication of the ability of a company to fulfill its obligation to repay liabilities.

Accepted Answer

The debt ratio shows the percentage of a company's assets financed by debt, indicating how much the company relies on borrowed funds. It can be used to assess the company's ability to pay back its debts using its assets.

Question 11

The higher the debt ratio,the lower the risk of default.

Accepted Answer

The lower the debt ratio,the lower the risk of default.

Question 12

A journal entry for a $65 payment for rent expense was posted as a debit to Salaries Expense and a credit to Cash.Which of the following statements correctly states the effect of the error on the trial balance?

Accepted Answer

The error does not affect the equality of the trial balance because both the incorrect debit and the correct debit are for the same amount, and the credit entry remains unchanged.

Question 13

The ability of a company to pay its debts can be evaluated by using the ________.

Accepted Answer

The debt ratio measures the proportion of a company's assets that are financed through debt. It can indicate whether a company is able to meet its debt obligations and pay back its loans. A lower ratio implies that the company is less reliant on debt financing and is therefore in a better position to pay back its debts.

Question 14

Balancing errors can be detected by computing the difference between total debits and total credits on the trial balance.

Accepted Answer

This is true. If there is a balancing error, the total debits and total credits will not match on the trial balance, indicating that there is an error in the accounting records.

Question 15

Balancing errors can be detected by computing the difference between total debits and total credits on the trial balance.List three actions that can then be used to find the errors.

Accepted Answer

The answer of Balancing errors can be detected by computing...

Question 16

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

Accepted Answer

The correct formula to calculate the debt ratio is the total liabilities divided by the total assets. This gives an indication of the proportion of a company's assets that are financed by debt. A higher debt ratio indicates that a company has more debt than assets, which can be a cause for concern for investors and creditors.

Question 17

A journal entry for a $220 payment to purchase office supplies was erroneously recorded as a debit to Office Supplies for $500 and a credit to Cash for $220.Which of the following statements correctly states the effect of the error on the trial balance?

Accepted Answer

Since the journal entry was erroneously recorded as a debit to Office Supplies for $500 and a credit to Cash for $220, the sum of the debits will exceed the sum of the credits by $280 ($500 - $220 = $280). This means that the trial balance will not be in balance by $280, indicating an error in the recording of transactions.

Question 18

Converse Florists & Co.reported assets of $1,000 and equity of $450.What is its debt ratio? (Round your percentage answer to two decimal places. )

Accepted Answer

A)Total liabilities = $1,000 ? $450 = $550
Debt ratio = Total liabilities / Total assets
Debt ratio = $550 / $1,000 = 0.55 or 55.00%

Question 19

The debt ratio shows the proportion of assets financed with debt.

Accepted Answer

The debt ratio is equal to total debt divided by total assets and reflects the percentage of a company's assets that are financed with debt. Therefore, the statement is true.

Quiz 2: Recording Business Transactions

If the total debits equal the total credits on the trial balance,the individual account balances will be error free.

Provide a definition of each of the follow accounting terms.

What are two ways in which a company can improve its debt ratio?

Baytown Paper Company has a debt ratio of 25%,which means that 75% of the assets are financed by creditors.

The proportion of assets that are financed with debt can be calculated using the ________ ratio.

Durable Plastics Company had the following total assets,liabilities,and equity as of December 31. What is the company's debt ratio as of December 31? (Round your percentage answer to two decimal places. )

Calculate the debt ratio using the following trial balance of Superior Instruments,Inc.as of December 31,2019.

Provide a definition of each of the follow accounting terms.

Which of the following is assessed using the debt ratio?

The debt ratio is one indication of the ability of a company to fulfill its obligation to repay liabilities.

The higher the debt ratio,the lower the risk of default.

A journal entry for a $65 payment for rent expense was posted as a debit to Salaries Expense and a credit to Cash.Which of the following statements correctly states the effect of the error on the trial balance?

The ability of a company to pay its debts can be evaluated by using the ________.

Balancing errors can be detected by computing the difference between total debits and total credits on the trial balance.

Balancing errors can be detected by computing the difference between total debits and total credits on the trial balance.List three actions that can then be used to find the errors.

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

A journal entry for a $220 payment to purchase office supplies was erroneously recorded as a debit to Office Supplies for $500 and a credit to Cash for $220.Which of the following statements correctly states the effect of the error on the trial balance?

Converse Florists & Co.reported assets of $1,000 and equity of $450.What is its debt ratio? (Round your percentage answer to two decimal places. )

The debt ratio shows the proportion of assets financed with debt.