Which of the Following Is the Formula for Computing the Rate

question 63

Multiple Choice

Which of the following is the formula for computing the rate of return on total assets?

• A)(Net income + interest expense)/ average total assets
• B)Net income / net sales
• C)(Net income - preferred dividends)/ number of shares of outstanding common stock
• D)(Net income - preferred dividends)/ average common stockholders' equity

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Definitions:

Direct Materials

Raw materials that can be directly attributed to the manufacturing of a specific product and are an essential component in its production.

Office Equipment Depreciation

The process of allocating the cost of office equipment over its useful life, recognizing it as an expense on financial statements.

Direct Costs

Expenses that can be directly traced to the production of specific goods or services.

Indirect Costs

Expenses that are not directly tied to the production of goods or services, such as overhead, administration, and salaries.