Which of the Following Statements Is True

question 9

Multiple Choice

Which of the following statements is true?

• A)Turnover is not related to ROA.
• B)Leverage affects EPS.
• C)ROA is a function of turnover and leverage.
• D)EPS is solely a function of ROE

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Definitions:

Income Statement Accounts

Accounts that are used to prepare the income statement, summarizing a company's revenues, expenses, and profits over a period.

Deferrals

Income or expenses that have been recorded but not yet earned or used, respectively, affecting future accounting periods.

Recognition

The process of recording an item or event in financial statements once it meets the criteria for financial reporting as defined by accounting standards.

Matching Principle

An accounting principle that requires companies to report expenses at the same time as the revenues they are related to are earned.