An Entity's Profit Margin Is Affected by Which of the Following

question 12

Multiple Choice

An entity's profit margin is affected by which of the following ratios?

• A) Gross profit margin and expense ratios.
• B) Inventory and debtors days ratios.
• C) Gross profit margin and return on assets.
• D) Debt and equity ratios.

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Definitions:

Debits and Credits

Accounting terms used to record changes in accounts, where debits are entries on the left side of an account and credits are entries on the right.

Adjusting Entries

Journal entries made at the end of an accounting period to update accounts for accuracies in preparation for financial reporting.

Closing Entries

Journal entries made at the end of an accounting period to transfer balances from temporary accounts to permanent ones.

End-Of-Period Spreadsheet

A document used in accounting to compile all balance sheet and income statement accounts at the end of a reporting period.