149) At the beginning of the current year, Snell Co. total assets were \$248,000 and its total liabilities were \$174,200. 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. The company's debt ratio at the end of the current year is: A) 70%. B) 67%. C) 32%. D) 48%. E) 142%. Answer: B Explanation: Debt Ratio = Total Liabilities/Total Assets Debt Ratio = \$174,200**/\$260,000; Debt Ratio = 0.67 = 67% *Beginning Total Assets = Beginning Total Liabilities + Beginning Total Equity \$248,000 = \$174,200 + Beginning Total Equity; Beginning Total Equity = \$73,800 **Ending Total Assets = Ending Total Liabilities + Ending Total Equity \$260,000 = Ending Total Liabilities + (Beginning Equity + Revenues − Expenses − Withdrawals) \$260,000 = Ending Total Liabilities + (\$73,800 + \$93,000 − \$76,000 − \$5,000) \$260,000 = Ending Total Liabilities + \$85,800; Ending Total Liabilities = \$174,200 Difficulty: 3 Hard Topic: Debt Ratio Learning Objective: 02-A2 Compute the debt ratio and describe its use in analyzing financial condition. Bloom's: Apply AACSB/Accessibility: Analytical Thinking / Keyboard Navigation AICPA: BB Industry; FN Risk Analysis 150) The process of transferring general journal entry information to the ledger is called: A) Double-entry accounting. B) Posting. C) Balancing an account. D) Journalizing. E) Not required unless debits do not equal credits. Answer: B Difficulty: 1 Easy Topic: Journalizing and Posting Transactions Learning Objective: 02-P1 Record transactions in a journal and post entries to a ledger. Bloom's: Remember AACSB/Accessibility: Communication / Keyboard Navigation AICPA: BB Industry; FN Decision Making