Which of the Following Statements Is Inaccurate with Respect to the Total

question 117

Multiple Choice

Which of the following statements is inaccurate with respect to the total asset turnover ratio?

• A)It is calculated as sales revenues divided by total assets at year-end.
• B)It is decreased when additional plant and equipment is purchased.
• C)A high ratio implies efficient management of assets.
• D)It is decreased when additional inventory is purchased.

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Definitions:

Incurred

Refers to costs or expenses that have been realized or acquired in the execution of business activities or operations.

Costs

The expenses incurred in the production of goods or services or in the undertaking of any activity.

Manufacturing Overhead

The indirect costs associated with manufacturing, including costs for maintenance, utilities, and rent of factory facilities, not directly tied to specific units produced.

Prime Cost

The combined total of direct materials and direct labor costs associated with the production of a product, excluding overhead costs.