Rate of Return on Total Assets Is: (Net Income Minus

question 118

True/False

Rate of return on total assets is: (net income minus preferred stock dividends divided by average common stockholder's equity).

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Definitions:

Equity Method

An accounting technique used to record investments in which the investor has significant influence over the investee, typically through owning a large percentage of its stock.

Cost Method

An accounting method used to value an investment, based on the cost to acquire it plus any additional investments or deducting any reductions.

Impairment Loss

A reduction in the book value of an asset when its market value falls below its carrying amount on the balance sheet.

Straight Line Amortization

An approach to systematically allocate the cost of an intangible asset throughout its period of usefulness.