Which of the Following Statements Is Correct

question 64

Multiple Choice

Which of the following statements is correct?

• A) Selling inventory at its cost does not affect the net profit margin ratio.
• B) Accruing sales revenue does not affect the net profit margin ratio.
• C)The asset turnover ratio increases when fixed assets are sold at a loss.
• D)The net profit margin ratio decreases when common stock is issueD.Selling fixed assets at a loss reduces average total assets which is the denominator of the asset turnover ratio. The asset turnover ratio will therefore increase.

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Definitions:

Free-Trade Policies

Economic policies that allow imports and exports to occur without restrictive tariffs, quotas, or other barriers to trade.

Protection

The practice of shielding a sector of the economy from foreign competition.

General Agreement on Tariffs and Trade

An international treaty aimed at promoting international trade by reducing or eliminating trade barriers such as tariffs and quotas; it was replaced by the World Trade Organization (WTO) in 1995.

Voluntary Export Restraint

A self-imposed limitation by exporting countries on the volume of their exports of a particular good.