Which of the Following Statements Regarding Net Margin Is Not

question 79

Multiple Choice

Which of the following statements regarding net margin is not true?

• A)Net margin refers to the percentage of each sales dollar remaining after all expenses are subtracted.
• B)Net margin may be calculated in several ways.
• C)The amount of net margin is affected by a company's choices of accounting principles.
• D)The smaller the net margin the better.

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Definitions:

Credit Period

The time frame allowed by a creditor for a debtor to pay an outstanding bill or loan without incurring penalties or interest.

Cash Discount

An incentive offered by sellers to purchasers for paying an invoice promptly, usually defined as a percentage reduction in the invoice amount.

EOQ Model

Economic Order Quantity model; an inventory management method used to determine the optimum order quantity that minimizes the total inventory holding costs and ordering costs.

Shortage Costs

Costs that fall with increases in the level of investment in current assets.