Activity Ratios Are Ratios with Some Measure of Profit in the Numerator

question 32

True/False

Activity ratios are ratios with some measure of profit in the numerator and some measure of firm size or assets in the denominator.

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Definitions:

Prepaid Insurance

An asset account representing insurance payments made in advance of the period covered by the payment, to be allocated as an expense over time.

Salaries Expense

The total amount paid to employees for services rendered during a specific period, reported on the income statement.

Journalize

Journalize is the process of recording financial transactions in the chronological order of their occurrence within the journal in accounting.

Transactions

Transactions involve the exchange of goods, services, or financial assets in return for something of value between two or more entities.