In Computing the Return on Total Assets, Interest Expense Is

question 157

True/False

In computing the return on total assets, interest expense is subtracted from net income before dividing by average total assets.

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Definitions:

Accrued Interest

Interest that has been incurred but not yet paid, reflecting amounts owed for loans or investments.

Gain On Sale

The profit realized from the sale of assets when the selling price exceeds the book value of the asset sold.

Semiannual Interest

Interest that is computed and disbursed biannually, frequently associated with bonds and lending agreements.

Accrued Interest

Interest that has been incurred but not yet paid, accumulating on loans or bonds over time until payment is made.