Which of the Following Would Be an Argument for the Use

question 82

Multiple Choice

Which of the following would be an argument for the use of net book value in the computation of operating assets in return on investment calculations?

• A)It allows the manager to replace old, worn-out equipment with a minimum adverse impact on ROI.
• B)It allows ROI to decrease over time as assets get older.
• C)It is consistent with how plant and equipment items are reported on the balance sheet.
• D)It eliminates both age of equipment and method of depreciation as factors in ROI computations.

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Definitions:

Single-Step

A method of preparing the income statement where all revenues are summarized together and all expenses are summarized together, with a single step to determine net income.

Income Statement

A financial report that shows the company's revenues, expenses, and profits over a specific period of time.

Sales Revenues

The total income a business receives from selling goods or services before any expenses are deducted.

Cash Collected

The total amount of money received by a company, typically over a specific period, including revenues from sales, investments, and financing activities.