Question : 101. Which of the following statements incorrect? A. Higher financial leverage involves higher : 1225495

101. Which of the following statements is incorrect? 

A. Higher financial leverage involves higher risk.

B. Risk is higher if a company has more liabilities.

 Risk is higher if a company has higher assets.

D. The debt ratio is one measure of financial risk.

E. Lower financial leverage involves lower risk.

102. Stride Along has total assets of $425 million. Its total liabilities are $110 million. Its equity is $315 million. Calculate the debt ratio. 

A. 38.6%.

B. 13.4%.

C. 34.9%.

 25.9%.

E. 14.9%.

103. Stride Along has total assets of $385 million. Its total liabilities are $100 million and its equity is $285 million. Calculate its debt ratio. 

A. 35.1%.

 26.0%.

C. 38.5%.

D. 28.5%.

E. 58.8%.

104. Which of the following statements describing the debt ratio is false? 

A. It is of use to both internal and external users of accounting information.

 A relatively high ratio is always desirable.

C. The dividing line for a high and low ratio varies from industry to industry.

D. Many factors such as a company’s age, stability, profitability and cash flow influence the determination of what would be interpreted as a high versus a low ratio.

E. The ratio might be used to help determine if a company is capable of increasing its income by obtaining further debt.

105. At the end of the current year, Norman Company reported total liabilities of $300,000 and total equity of $100,000. The company’s debt ratio on the last year-end was: 

A. 300%.

B. 33.3%

 75.0%.

D. $400,000.

E. Cannot be determined from the information provided.

106. At the beginning of the current year, Taunton Company’s total assets were $248,000 and its total liabilities were $175,000. During the year, the company reported total revenues of $93,000, total expenses of $76,000 and owner withdrawals of $5,000. There were no other changes in owner’s capital during the year and total assets at the end of the year were $260,000. Taunton Company’s debt ratio at the end of the current year is: 

A. 70.6%.

 67.3%.

C. 32.7%.

D. 48.6%.

E. Cannot be determined from the information provided.

107. The process of transferring general journal information to the ledger is: 

A. Double-entry accounting.

 Posting.

C. Balancing an account.

D. Journalizing.

E. Not required unless debits do not equal credits.

108. A column in journals and ledger accounts used to cross reference journal and ledger entries is the: 

A. Account balance column.

B. Debit column.

 Posting reference column.

D. Credit column.

E. Description column.

109. The record in which transactions are first recorded is the: 

A. Account balance.

B. Ledger.

 Journal.

D. Trial balance.

E. Cash account.

110. The general journal provides a place for recording all of the following except: 

A. The transaction date.

B. The names of the accounts involved.

C. The amount of each debit and credit.

D. An explanation of the transaction.

 The balance in each account.