_____ Measure a Management's Effectiveness in Using the Invested Capital

question 26

Multiple Choice

_____ measure a management's effectiveness in using the invested capital of the business to provide profits.

• A) Profitability ratios
• B) Gross margin ratios
• C) Return on investments
• D) Return on equity

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Definitions:

Unadjusted Year End

The financial figures reported at the end of a fiscal year before any adjustments are made for accruals, deferrals, or other accounting entries.

Trial Balance

An accounting report that lists the balances of all ledgers accounts in order to verify that total debits equal total credits.

Factoring Arrangement Without Recourse

A financial transaction in which a business sells its receivables to a third party (a factor) at a discount, without the seller being responsible if the debtor fails to pay.

Loss on Sale of Receivables

A financial loss incurred when the sale price of accounts receivable is less than their carrying amount on the balance sheet.