Which of the Following Statements Is Incorrect

question 103

Multiple Choice

Which of the following statements is incorrect?

• A) The equity multiplier is equal to 1 plus the debt-equity ratio.
• B) Return on equity is equal to the return on assets multiplied by the equity multiplier.
• C) Return on equity is equal to total equity divided by net income.
• D) Return on equity is equal to the equity multiplier multiplied by the total asset turnover multiplied by the profit margin.
• E) The difference between the asset multiplier and liability multiplier equals the equity multiplier.

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Definitions:

Direct Labor Costs

The total cost of wages, benefits, and taxes for employees who are directly involved in the production of goods or services.

Cost Of Goods Manufactured

The manufacturing costs associated with units of product that were finished during the period.

Job-Order Costing

An accounting method used to track costs and revenues by specific jobs or orders, commonly used in industries with customized products.

Direct Labor Costs

The wages and benefits paid to workers who are directly involved in the manufacturing of products.