A Company Failed to Make an Accrual Adjustment for Interest

question 4

Multiple Choice

A company failed to make an accrual adjustment for interest owed on a short-term bank loan.Which of the following statements is true about how this will affect the financial ratios?

• A)Net profit margin ratio will be understated and debt-to-assets ratio will be overstated.
• B)Net profit margin ratio and debt-to-assets ratios will be unaffected.
• C)Net profit margin ratio will be overstated and debt-to-assets ratio will be understated.
• D)Net profit margin ratio will be unaffected and debt-to-assets ratio will be overstated.

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Definitions:

Collective Action

Involves a group of individuals working together to achieve a common objective or address a shared issue.

Social Norm

Unwritten rules that dictate the acceptable and expected ways for individuals to act within a group.

Construction Workers

Skilled laborers who build, maintain, and repair structures such as buildings, roads, and bridges.

Parent-child Interactions

The dynamic exchanges between a parent and child, which can significantly influence the child's development and behavior.