If Rent Expense Has Been Debited, It Is Likely That

question 109

Multiple Choice

If Rent Expense has been debited, it is likely that:

• A) the rent was paid for three months in advance.
• B) a copy of the lease was received.
• C) this month's rent was paid.
• D) All of these are possible.

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Definitions:

Retention Ratio

The proportion of net income that is retained in the business rather than distributed to shareholders as dividends.

Dividend Payout Ratio

A financial indicator showing the proportion of a company's profits distributed to its shareholders as dividends.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from revenues. It's often referred to as the bottom line.

Capital Intensity Ratio

A metric that measures the amount of assets needed by a company to generate one dollar of revenue.