According to accounting principles: depreciation is a cash expense operating exp

Question

According to accounting principles: depreciation is a cash expense operating expenses during the year are tied to revenues they helped to generate current assets should equal current liabilities net working capital should equal zero Return on Equity is most accurately described as a measure of: return on assets combined with liquidity the return available to all stockholders in the company is the amount of net income paid to retained earnings alter allowing for paid the return on common stockholder investment If the Inventory Turnover Ratio is very high relative to industry averages: the firm has too high a level of inventory the firm has too many items that the customers probably do not want the firm has good total assets management practices the firm may he losing sales if its inventory is too low

Explanation / Answer

Answer 14

(B) Operating Expenses during the year are tied to revenues they helped to generate.

Matching Principle requires that expenses incurred by an organization must be charged to the income statement in the accounting period in which the revenue, to which those expenses relate, is earned.

Answer 15

(D) Return on equity is most described as a measure of Return on Common Stock Holder Investment

ROE= Net Income/Shareholder's Equity

Answer 16

(D) If the inventory turnover is very high relative to industry average, the firm may be losing sales is its inventory is too low.

Inventory Turnover shows how many times a company's inventory is sold and replaced over a period. If it is too high it means low level of inventory is maintained in the firm, which can resuld in not meeting customers demands on time, because of shortage of inventory.

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