Question

1. the asset turnover ratio multiplied by the return on sales is equal to a company's ,,,,,,,,,,,,,

2. What are the two "timing differences" which occur when preparing a bank reconcilation?

a. b.

3. In calculating the asset turnover of a company, which category of assets is not included?

4. Which depreciation method presented is not based on the "passage of time?"

5. Which method of depreciation will result in the highest amount of total depreciation expense over the life of the asset?

Answer 1

1) Return on Asset  

Asset Turnover ratio = Sales / Average total asset

Return on sales = Net Income / Sales

multiplying it will cancel sales hence equation turns Net income / Average total asset = Return on Asset

2) two "timing differences" which occur when preparing a bank reconcilation are :

a) Cheque issued by the bank but not yet presented for payment

b) Cheque paid into bank but not yet collected

3) ficticious assets are the category of assets is not included in the asset turnover of a company

4) Annuity depreciation method are not based on the "passage of time

5) double-declining-balance method of depreciation will result in the highest amount of total depreciation expense over the life of the asset