Which of the Following Statements About a Ratio Is NOT

question 3

Multiple Choice

Which of the following statements about a ratio is NOT true?

• A) A ratio has little meaning on its own.
• B) A ratio is always expressed as a percentage.
• C) A ratio can be interpreted and used meaningfully only with a good understanding of the company.
• D) Ratios are indicators that can be interpreted.

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Definitions:

Capitalized Trucks

The value of trucks owned by a company that is treated as an asset on the balance sheet and depreciated over time.

Sum-Of-The-Years'-Digits Method

A method of accelerated depreciation calculating annual depreciation expense based on the sum of the years' digits of an asset's useful life.

Double-Declining-Balance Method

An accelerated depreciation method that expenses more of an asset’s cost closer to the beginning of its usable life.

Depreciable Asset Accounting

The accounting process that involves allocating the cost of a tangible asset over its useful life.