Assume That,prior to Preparing Adjusting Entries at the End of the Year,Caterpillar

question 297

Multiple Choice

Assume that,prior to preparing adjusting entries at the end of the year,Caterpillar Corporation has a fixed asset turnover ratio of 3.4 based on average net fixed assets of $500,000,000.Which of the following year-end adjustments would cause Caterpillar's fixed asset turnover ratio to increase?

• A)Caterpillar accrues and capitalizes $50,000 for self-constructed assets.
• B)Caterpillar accrues a liability for ordinary repair costs in the amount of $50,000.
• C)Caterpillar writes down an impaired piece of equipment by $50,000.
• D)Caterpillar increases the sales returns & allowances by $50,000.

---

Definitions:

Environmental Standards

Regulations and criteria set by authorities concerning pollutants and emissions to preserve environmental quality.

Marginal Benefit

The additional satisfaction or value a consumer receives from consuming one more unit of a good or service.

Pollution

The introduction of contaminants into the natural environment, causing adverse change and harm to habitats and organisms.

Sources

Refers to the origins or places from which something is obtained, often used in the context of gathering information or materials.