When Examining an External Financial Report, a Ratio That Can

question 33

Multiple Choice

When examining an external financial report, a ratio that can be useful in determining the approximate age of the assets is:

• A) accumulated depreciation/average recorded property, plant and equipment at cost.
• B) net sales/average total assets.
• C) average total assets/net sales.
• D) net sales/ average property, plant and equipment.

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Definitions:

Value-Added Tax (VAT)

A tax on the amount by which the value of an article has been increased at each stage of its production or distribution, ultimately passed on to the consumer.

Progressive Taxes

A tax system where the tax rate increases as the taxable amount or income increases, placing a higher financial burden on wealthier individuals.

Hidden Tax

A non-obvious tax or financial burden on consumers that is not directly imposed by legislation but occurs through regulation or other means.

Value-Added Tax (VAT)

A type of consumption tax that is placed on a product whenever value is added at a stage of production and at the point of retail sale.