Which of the Following Is NOT an Accounting Transaction

question 40

Multiple Choice

Which of the following is NOT an accounting transaction?

• A) A payment is made by cheque to Telstra.
• B) The company is awarded a contract to build a bridge,with construction to commence in 12 months' time.
• C) A creditor charges interest for late payment.
• D) The payroll department issues a cheque to pay an employee.

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Definitions:

Basic Earning Power Ratio

A financial ratio that shows how effectively assets are being used to generate earnings before the influence of taxes and financing costs.

Times-Interest-Earned Ratio

A measure of a company's ability to honor its debt payments, calculated by dividing earnings before interest and taxes (EBIT) by interest expenses.

Equity Multiplier

A ratio of financial leverage that calculates the proportion of a company's assets funded by its shareholders' equity.

Total Assets Turnover Ratio

Measures the turnover of all the firm’s assets; it is calculated by dividing sales by total assets.