Which of the following would result in the RETURN OF ASSETS for an accounting entity deteriorating. Answer Can be all of them, none of them or any combination of them. 1. Accrued interest revenue is adjusted 2. Share market price of the entity's shares increases 3. Cash receipt from a customer for amounts owing which was previously sold on credit
Which of the following would result in the RETURN OF ASSETS for an accounting entity deteriorating. Answer Can be all of them, none of them or any combination of them.
1. Accrued interest revenue is adjusted
2. Share market price of the entity's shares increases
3. Cash receipt from a customer for amounts owing which was previously sold on credit
It is a ratio that measures a company's ability to generate profit on the total amount invested. It is calculated by dividing net profit / Total Averages Assets.
While calculating the ROA it is assumed that all assets are recorded at fair value. On another side of financial position Liabilities and Equity are equals to Total Assets
Now when share price increase it means that Fair value of Total Assets Increase and it results in an increase in the denominator (i.e Total Assets) and therefore it will decrease company's ROA.
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