A Loss on the Sale of an Asset Would Occur

question 116

Multiple Choice

A loss on the sale of an asset would occur when:

• A)the cash received is less than the book value of the asset.
• B)the cash received is equal to the book value of the asset.
• C)the cash received is greater than the book value of the asset.
• D)None of these answers is correct.

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Definitions:

Equity Multiplier

This financial ratio measures a company's leverage by comparing its total assets to its total shareholders' equity.

Net Profit Margin

A financial metric that shows the percentage of net income relative to revenue, indicating how much profit is generated from each dollar of sales.

Gross Margin

The difference between sales revenue and the cost of goods sold (COGS), indicating the profitability of a company's core business activities.

Times Interest Earned

A financial ratio that measures a company's ability to meet its debt obligations by comparing its earnings before interest and taxes (EBIT) to its interest expenses.