The Asset Turnover Ratio (ATR)for Jovial Inc

question 7

Multiple Choice

The asset turnover ratio (ATR) for Jovial Inc.has evolved as follows over the past three years:
ATR(Y-3) = 200% ATR(Y-2) = 190% ATR(Y-1) = 180%

• A) New assets are acquired for the same amount as the annual depreciation expense.
• B) Sales revenue grew at a rate that is more rapid than the rate of growth of net assets.
• C) Assets are being used more efficiently over time.
• D) Assets are being used less efficiently over time.

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Definitions:

Depreciation Expense

An accounting method of allocating the cost of a tangible or physical asset over its useful life.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset since it was put into use, reducing its book value.

Fiscal Period

A fiscal period is the time frame used by governments and businesses for accounting purposes and preparing financial statements, typically a year, quarter, or month.

Adjusting Entry

Adjusting entry refers to a journal entry made at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred, ensuring the accounts reflect these amounts accurately.