What Would Happen to the Net Profit Margin Ratio If

question 120

Multiple Choice

What would happen to the net profit margin ratio if the company recorded a deferral adjusting entry at the end of 2012 for depreciation of $500 on one of its assets?

• A) The net profit margin ratio would increase indicating an improvement in
• B) performance.
• C) The net profit margin ratio would decrease indicating less control over expenses.
• D) The net profit margin ratio would not change.
• E) The net profit margin ratio would have decreased in 2012 without this transaction.

---

Definitions:

Enforceable Contract

An enforceable contract is a legally valid agreement between two or more parties, which can be upheld and compelled by the courts.

Tablet

A portable computing device featuring a touch-sensitive screen that can be used for reading, browsing the internet, or running applications.

Running Shoes

Footwear specifically designed for jogging or running, emphasizing comfort, durability, and performance.

Oral Contract

An agreement between parties that is made verbally and is as legally binding as a written contract, though harder to prove.