Which of the Following Transactions Will Decrease Both the Return

question 55

Multiple Choice

Which of the following transactions will decrease both the return on assets ratio and the total asset turnover ratio?

• A)Purchasing land by signing a note payable.
• B)Accruing interest expense at year-end.
• C)Accruing interest revenue at year-end.
• D)Collecting cash from an account receivable.

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Definitions:

Net Operating Income

The profit generated from normal business operations, excluding expenses from interest and taxes.

Contribution Margin Ratio

The proportion of sales revenue that exceeds variable costs, indicating how much contributes to covering fixed costs and generating profit.

Target Profit

The amount of net income a company aims to achieve for a specific period as part of its financial and operational planning.

Monthly

Pertaining to, occurring, or calculated over a month.