Return on assets is an overall measure of profitability computed by dividing net income by average assets.
Return on Assets = Net Income ÷ Average Assets
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- Independent internal verification
Most internal control systems provide for independent internal verification. This principle involves the review of data prepared by employees.
- Average-cost method
Average-cost method is an inventory costing method that uses the weighted average unit cost to allocate to ending inventory and cost of goods sold the cost of goods available for sale.
- Direct labor quantity standard
The direct labor quantity standard is the time that should be required to make one unit of the product. This standard is especially critical in labor-intensive companies.
- Normal balance
The normal balance of an account is on the side where an increase in the account is recorded. Debits to a specific asset account should exceed the credits to that account.
- Total quality management (TQM)
Total quality management (TQM) systems implemented to reduce defects in finished products with the goal of achieving zero defects.
- Income taxes
Under the U.S. pay-as-you-go system of federal income taxes, employers are required to withhold income taxes from employees each pay period.
- Contra asset account
Accumulated Depreciation- Office Equipment is a contra asset account which is an account offset against an asset account on the balance sheet.