Homework answers / question archive / Question 1 The rate of return on total assets is computed by dividing   Net sales by ending total assets   Net income by ending total assets   Net income by average total assets   Net sales by average total assets Question 2 The theoretical justification for reporting depreciation expense is   Depreciation expense represents a decrease in the value of the asset that has occurred during the accounting period

Question 1 The rate of return on total assets is computed by dividing   Net sales by ending total assets   Net income by ending total assets   Net income by average total assets   Net sales by average total assets Question 2 The theoretical justification for reporting depreciation expense is   Depreciation expense represents a decrease in the value of the asset that has occurred during the accounting period

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Question 1

The rate of return on total assets is computed by dividing

 

Net sales by ending total assets

 

Net income by ending total assets

 

Net income by average total assets

 

Net sales by average total assets

Question 2

The theoretical justification for reporting depreciation expense is

 

Depreciation expense represents a decrease in the value of the asset that has occurred during the accounting period.

 

Depreciation expense represents the impairment of the asset that has occurred during the accounting period.

 

Depreciation expense represents the unrealized loss that has been incurred by using the asset during the accounting period.

 

Depreciation expense represents the allocation of the historical cost of the asset that has been applied to the accounting period

Question 3

Assets that qualify for interest cost capitalization include

 

Assets under construction for a company's own use

 

Assets that are ready for their intended use in the earnings of the company

 

Assets that are not currently being used because of excess capacity

 

All of these assets qualify for interest cost capitalization

Question 4

The cost of a nonmonetary asset acquired in exchange for another nonmonetary asset when the exchange has commercial substance is usually recorded at

 

The fair value of the asset given up, and a gain but not a loss may be recognized

 

The fair value of the asset given up, and a gain or loss is recognized

 

The fair value of the asset received if it is equally reliable as the fair value of the asset given up

 

Either the fair value of the asset given up or the asset received, whichever one results in the largest gain (smallest loss) to the company

Question 5

The asset turnover ratio is computed by dividing

 

Net sales by average total assets

 

Net sales by ending total assets

 

Net income by ending total assets

 

Net income by average total assets