The Income Number Used in the Rate of Return on Assets

question 124

True/False

The income number used in the rate of return on assets is income after interest expense is added back.

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Definitions:

Borrowing Money

The act of obtaining funds from a lender under the agreement to repay them, usually with interest, over a specified period.

Other Expenses

Non-operating expenses that do not relate to the main operating activities of the business; they appear in a separate section on the income statement. One example given in the text is Interest Expense, interest owed on money borrowed by the company.

Income Statement

A financial statement that shows a company's revenues, expenses, and net income over a specific period.

Supplies Used

The cost of consumables used in the operation of a business during an accounting period.