Which of the Following Is a True Statement Regarding APB

question 2

Multiple Choice

Which of the following is a true statement regarding APB Opinion No. 5?

• A)It took a legalistic approach to determining whether a lease was in substance a purchase.
• B)The stated objective was to clarify ARB 38, not change it.
• C)Cancellability was viewed as mitigating the executory nature of lease contracts.
• D)It greatly increased the number of leases that were capitalized.

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Definitions:

Minimum Acceptable Return

The minimum return on an investment that is required by an investor or fund manager, taking into account the risk of the investment.

Divisional Assets

Assets that are specific to, or used by, a particular division within a company.

Profit Margin

The ratio of net income earned to total revenue received by a business, indicating the efficiency of converting sales into profit.

Investment Turnover

A ratio measuring the efficiency of a company's use of its assets in generating sales revenue; calculated as sales divided by invested assets.