S Corphas a Rate of Return on Assets of 10% and and a Debt/equity

question 110

Short Answer

S Corp.has a rate of return on assets of 10% and a debt/equity ratio of 2 to 1.Not including any indirect effects on earnings,the immediate impact of recording a capital lease on these ratios is a(an):

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Definitions:

Fiduciary Funds

These are funds used to account for resources held by an entity in a trustee or agent capacity for others, ensuring these assets are managed according to the trust agreement.

Proprietary Funds

Governmental accounting term for funds used by an organization that behaves like a private business, where the costs of providing goods or services to the public must be recovered through sales and fees.

Broad Classifications

Broad classifications refer to the general categories or groups used to organize similar entities, concepts, or items based on shared characteristics or functions.

Modified Accrual Accounting

An accounting method that combines elements of both accrual and cash basis accounting, recognizing revenues when they are available and measurable, and expenses when incurred.