Which of the Following Statements Is Not Correct

question 60

Multiple Choice

Which of the following statements is not correct?

• A)Purchasing fixed assets through debt financing decreases the financial leverage ratio.
• B)Accruing an expense will affect the net profit margin ratio.
• C)Return on equity may increase even when the financial leverage ratio decreases.
• D)Purchasing treasury stock results in a decrease in total asset turnover.

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Definitions:

Holding Periods

The length of time an investment is held before being sold, affecting the tax treatment of any gains or losses.

Partnership %

The percentage of ownership or profit-sharing assigned to each partner in a partnership agreement, determining the distribution of earnings and losses.

§1231 Gain

A type of gain that arises from the sale of property used in a trade or business, which is subject to favorable capital gains tax rates if held for more than one year.

Self-Employment Income

Income generated by an individual directly from one's own business, trade, or profession, rather than from an employer.