Which of the Following Statements Is Correct

question 35

Multiple Choice

Which of the following statements is correct?

• A)Selling inventory at its cost does not affect the net profit margin ratio.
• B)Accruing sales revenue does not affect the net profit margin ratio.
• C)The total asset turnover ratio increases when fixed assets are sold at a loss.
• D)The net profit margin ratio decreases when common stock is issueD.Selling fixed assets at a loss reduces average total assets which is the denominator of the total asset turnover ratio.The total asset turnover ratio will therefore increase.

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Definitions:

Car Dealership

A business that sells new or used cars at the retail level, typically based on a dealership contract with an automaker or its sales subsidiary.

Benefits

The advantages or positive outcomes gained from a product or action.

Sunk Cost

Costs that have already been incurred and cannot be recovered, which should not affect future investment or business decisions.

Outsourcing

The practice of contracting out certain business functions or processes to a third-party provider.