Which of the Following Statements Is False

question 75

Multiple Choice

Which of the following statements is false?

• A) A decrease in the asset turnover ratio results in a decrease in the return on assets ratio.
• B) An increase in average total assets results in a decrease in both the asset turnover ratio and return on assets ratio.
• C)A decrease in the asset turnover ratio results in a decrease in the net profit margin ratio.
• D)An increase in the net profit margin ratio results in an increase in the return on assets ratio.

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Definitions:

Credit Sales

Sales in which revenue is recognized at the point of sale but payment is deferred till a later date, typically employed in business-to-business transactions.

Uncollectible Accounts

Receivables that are deemed to be uncollectable from debtors, leading to their recognition as a loss.

Credit Policy

Guidelines that define the credit limits and terms extended by a business to its customers.

Percentage of Receivables Basis

A method for estimating uncollectible accounts by applying a fixed percentage to the total receivables balance.