The following question relate to PQR, which has the following ratios: return on assets, (ROA) 12%; return on equity (ROE) 14%; and current ratio (CR) of 2:1.
-The company changed accounting methods by deciding to capitalise rather than expense a research and development outlay.This will:
A) increase ROE,but have no effect on ROA and CR
B) increase ROA,ROE and CR
C) increase ROA and ROE,but have no effect on CR
D) have no effect on ROA,ROE or CR.

Question

Quizplus · Accepted Answer

Capitalizing R&D increases assets, which can increase ROA and ROE, but it does not affect the current ratio as it involves non-current assets.

The Following Question Relate to PQR, Which Has the Following