BGL Enterprises Increases Its Operating Efficiency Such That Costs Decrease

question 99

Multiple Choice

BGL Enterprises increases its operating efficiency such that costs decrease while sales remain constant.As a result, given all else constant, the:

• A)return on equity will increase.
• B)return on assets will decrease.
• C)profit margin will decline.
• D)equity multiplier will decrease.
• E)price-earnings ratio will increase.

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Definitions:

Owner's Capital

The amount of money and other assets contributed by the owner(s) to a business, plus the retained earnings minus any withdrawals.

Accounts Receivable

Amounts owed to a business by its customers for goods or services sold on credit.

Subsidiary Ledger

A detailed ledger that contains the individual accounts needed to support a major ledger account, such as accounts receivable, where individual customer accounts are detailed.

Control Account

An account used in the general ledger to summarize and keep track of transactions relating to a specific aspect of a company's finances, such as accounts receivable or payable.