Return on Investment (ROI) Is a Term Often Used to Express

question 80

Multiple Choice

Return on investment (ROI) is a term often used to express income earned on capital invested in a division (investment center) . A division's ROI would increase if:

• A) Sales increased by the same dollar amount as expenses and total assets increased.
• B) Sales remained the same and expenses were reduced by the same dollar amount that total assets increased.
• C) Sales decreased by the same dollar amount that expenses increased.
• D) Sales and expenses increased by the same percentage that total assets increased.
• E) Net profit margin on sales increased by the same percentage that total assets increased.

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Definitions:

Total Assets

The sum of all assets owned by an entity, as recorded on the balance sheet, representing the resources controlled by the entity.

Adjusting Entry

An accounting journal entry made at the end of an accounting period to allocate income and expenditures to the appropriate period, ensuring compliance with the accrual basis of accounting.

Allowances for Doubtful Accounts

A contra-asset account that reduces the total amount of accounts receivable to reflect the portion that is estimated not to be collected.

Net Realizable Value

The estimated selling price in the ordinary course of business, minus the estimated costs of completion and the costs necessary to make the sale.