Garbage Collectors, Inc., has been capitalizing the annual painting of its garbage trucks. Assuming that Garbage's return on equity is reported at 20%, which of the following is true?
a. Return on common equity is overstated.
b. Return on common equity is correct.
c. Return on common equity is understated.
a. Return on common equity is OVERSTATED.
Net income is overstated because the costs should be expensed. Net income is closed into retained earnings, which is part of shareholders' equity, so shareholders equity also is overstated. Because the ROCE is less than one, adding the same number to the numerator and denominator will increase (i.e., overstate) the ratio.]
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Buford's manager told him that he has a unique capability to be a high performer at his job. Buford goes on to perform very well compared to his peers, even though he has no such unique capability above and beyond his coworkers. Buford is a living example of the ___________.
a. self-serving bias b. Pygmalion effect c. Golem effect d. fundamental attribution error
Heat from sunlight reaching water-filled containers is used in
a. active solar-heating systems only b. passive solar-heating systems c. most homes d. air-conditioning systems