The Rate of Return on Total Assets Is Computed by Dividing

question 15

Multiple Choice

The rate of return on total assets is computed by dividing

• A) Net sales by ending total assets
• B) Net income by ending total assets
• C) Net income by average total assets
• D) Net sales by average total assets

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Definitions:

Indirect Approach

A method for preparing the cash flow statement where net income is adjusted for non-cash transactions, deferred taxes, and changes in working capital.

Investing Activities

Financial transactions and events involving the purchase and sale of long-term assets and investments, as reported in the cash flow statement.

Direct Approach

A method of financial reporting or problem solving that involves straightforward, clear communication without indirectness.