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.

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