Which of the following statements is correct?
A)firms must use the same depreciation methods for tax and financial reporting
B)return on assets based on reported values tends to be overstated
C)all the assets a firm owns are reported on its balance sheet
D)plant assets are reported at fair market value

Question

Quizplus · Accepted Answer

Return on assets (ROA) is calculated by dividing a company's net income by its total assets. However, reported values of assets may not reflect their true market values, which may result in an overstatement of ROA. This is because assets are recorded at historical cost (minus accumulated depreciation), which may not reflect their current market values.

Which of the Following Statements Is Correct