Which of the Following Statements Is Most Correct

question 142

Multiple Choice

Which of the following statements is most correct?

• A)Capital formation was $1.6 trillion in 2009 up from $2.2 billion for 2006 largely due to the steep rise in home prices; in addition, the change in private inventories for 2009 was -$125 billion reflecting the severity of the financial crisis of 2007-09.
• B)Capital formation was $1.6 billion in 2009 down from $2.2 trillion for 2006 largely due to the steep decline in home prices; in addition, the change in private inventories for 2009 was +$125 billion reflecting the severity of the financial crisis of 2007-09.
• C)Capital formation was $1.6 trillion in 2009 up from $2.2 trillion for 1993 largely due to the steep decline in home prices; in addition, the change in private inventories for 2009 was -$125 thousand reflecting the severity of the financial crisis of 2007-09.
• D)Capital formation was $1.6 million in 2009 down from $2.2 million for 2006 largely due to the steep decline in home prices; in addition, the change in private inventories for 2009 was -$125 million reflecting the severity of the financial crisis of 2007-09.
• E)none of the above.

Understand the concept of return on investment and how it is calculated.

Determine the investment turnover and understand its implications for business performance.

Calculate and interpret profit margin for divisions or companies.

Identify the responsibilities and performance measures of investment centers.

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Definitions:

Direct Method

An approach to costing that identifies the variable costs directly attributable to specific cost objects, like products or services.

Service Department Costs

Costs associated with the departments that do not directly produce goods but provide essential support services to production departments.

First-In, First-Out Method

An accounting method for valuing inventory where the oldest items are sold or used first.

Equivalent Units

A concept in process costing that converts partially completed units into a number of equivalent full units for the purpose of cost assignment.