Which of the Following Is Correct

question 101

Multiple Choice

Which of the following is correct?

• A) Return on assets = Net income/Current assets
• B) Gross margin = Gross profit/Net sales
• C) Operating margin = Operating income/Total assets
• D) Return on assets = Net income/Fixed assets
• E) Return on equity = Net income/Retained earnings

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Definitions:

Straight-line Method

A depreciation method where the value of an asset is reduced evenly over its useful life.

Journal Entries

Records of financial transactions in the accounting system, indicating the accounts and amounts to be debited and credited.

Equipment Cost

The purchase price of machinery and tools required for manufacturing or providing services, excluding ongoing operating expenses.

Salvage Value

The calculated sale amount an asset is deemed to achieve after its useful life concludes.