Which of the following formulae is used to calculate average total assets for the return on assets ratio?
A) Average total assets = (Beginning total assets + Ending total assets) × 2
B) Average total assets = (Beginning total assets - Ending total assets) × 2
C) Average total assets = (Beginning total assets - Ending total assets) / 2
D) Average total assets = (Beginning total assets + Ending total assets) / 2

Question

Quizplus · Accepted Answer

The formula used to calculate average total assets for the return on assets ratio is (Beginning total assets + Ending total assets) / 2. This is because we want to take an average of the total assets at the beginning and end of the period to get a more representative value of the assets over the entire period. Therefore, choice D is the best choice.

Which of the Following Formulae Is Used to Calculate Average