What would happen to the net profit margin ratio if the company recorded depreciation at the end of 2015 for depreciation of $500 on one of its assets?
A)Net profit margin would increase indicating an improvement in performance.
B)Net profit margin would decrease indicating less control over expenses.
C)Net profit margin would not change.
D)Net profit margin would have decreased in 2015 without this journal entry.

Question

Quizplus · Accepted Answer

Recording depreciation reduces the net income of a company, therefore decreasing the net profit margin ratio. This indicates less control over expenses.

What Would Happen to the Net Profit Margin Ratio If