Which of the Following Misstatements Would Cause the Net Profit

question 93

Multiple Choice

Which of the following misstatements would cause the net profit margin ratio to be understated?

• A) Capitalizing costs that should have been expensed.
• B) Failing to adjust for depreciation in the current period.
• C) Failing to accrue income taxes incurred but not yet paid for the current period.
• D) Failing to accrue interest earned but not yet collected for the current period.

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Definitions:

Shareholder Approval

The authorization required from a corporation's shareholders to approve significant company actions, such as mergers or sale of substantial assets.

Market Values

The current price at which an asset or service can be bought or sold in an open and competitive market.

Real Property

Land and anything permanently affixed to the land, such as buildings and natural resources.

Certificate of Exchange

A document that certifies a completed exchange, often referring to the exchange of stock certificates in mergers and acquisitions.