Which of the Following Statements Is Incorrect

question 90

Multiple Choice

Which of the following statements is incorrect?

• A) Purchasing fixed assets through equity financing decreases asset turnover.
• B) Accruing an expense increases the financial leverage ratio.
• C)The return on equity ratio increases when treasury stock is purchased.
• D)The purchase of fixed assets will cause the asset turnover to decrease.

Understand the accounting treatment for product warranty liabilities and how to estimate and record warranty expenses.

Calculate the warranty expense to be reported in the income statement based on estimated repairs.

Distinguish between different types of payroll items and their tax treatment characteristics.

Comprehend the importance of matching the product warranty expense with the period of sales.

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Definitions:

Federal Contract Laws

Regulations that govern the procurement process, awarding, and execution of contracts by the federal government.

Warranty Waiver

A legal document or clause where a party agrees to relinquish their rights to a warranty provided in a contract.

Common Law

A body of unwritten laws based on legal precedents established by the courts, as opposed to statutory laws.

Full Warranty

A comprehensive guarantee that covers the repair or replacement of any defect in a product within a specified period.