If a Firm Has No Liabilities or Debt of Any

question 170

Multiple Choice

If a firm has no liabilities or debt of any kind on its balance sheet,then which of the following is TRUE?

• A)ROE > ROA
• B)ROE < ROA
• C)ROE = ROA
• D)ROA = net profit margin

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Definitions:

Net Income

The total profit of a company after accounting for all costs and expenses, including taxes and operational expenses.

Accrued Revenues

Revenues that have been earned but not yet received in cash or recorded at the statement date.

Accounting Period

A specific period of time for which financial accounts are prepared, commonly a year or a quarter.

Salaries Expense

Represents the total amount paid to employees as wages or salaries before any deductions, recognized in the accounting period in which employees' services are utilized.