Return of assets = Profit /(average total assets). If a new item of equipment is revalued down during the year for the first time (Dr revaluation expense (P/L), Cr Equipment), which is incorrect: 'Return on assets' will decrease.  'Earnings' or 'net profit after tax' will decrease.   'Average total assets' will decrease Other comprehensive income (OCI) will decrease.

Return of assets = Profit /(average total assets). If obsolete inventory is written down, Dr 'Inventory write down' (expense), Cr Inventory, which is incorrect:  'Return on assets' will increase 'profit' will decrease The impact on the numerator is proportionally greater 'ave total assets' will decrease

The return on total assets assesses:Group of answer choiceshow efficiently a business has used its economic resourcesthe return for ownersthe mix of debt and equity in a businesshow many assets a business needs to replace

Which of the following events will affect total equity but WILL NOT affect net profit for the current reporting period when recorded?Group of answer choicesThe recoverable amount of an asset is determined to be below its carrying amount, and no prior impairment loss has been recorded.An initial downwards revaluation of a PPE asset.The recoverable amount of an asset is determined to be higher than its carrying amount, and no prior impairment loss has been recorded.An initial upwards revaluation of a PPE asset.

Select all that applyWhich statements correctly describe return on investment (ROI)? (Choose every correct answer.)Multiple select question.It is sometimes referred to as return on assets (ROA).It is normally calculated using net income as the measure of the return.It is normally calculated using average total assets as the measure of the investment.It is calculated by dividing the average net income by the average total assets.It is calculated by dividing net income earned during the year by the total assets at the end of the year.

If profit is $21,000, after deducting interest of $5,000, and average total assets are $150,000, calculate return on assets to assess profitability from a management viewpoint.