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AICPA Exam CPA-Business Topic 1 Question 84 Discussion

Actual exam question for AICPA's CPA-Business exam
Question #: 84
Topic #: 1
[All CPA-Business Questions]

The following information pertains to Quest Co.'s Gold Division for 1993:

Quest's return on investment was:

Show Suggested Answer Hide Answer
Suggested Answer: C

Choice 'c' is correct. Return on investment equals net income divided by average invested capital:

Choices 'a', 'b', and 'd' are incorrect, per the above calculation.


by Cecilia at Apr 10, 2024, 06:17 AM

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Jolene
6 months ago
I think it's A) 10.00 percent, because it's often a safe bet.
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Yolando
6 months ago
I agree with Wava, B) 13.33 percent seems like the right answer.
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Fausto
6 months ago
I'm not sure, but I think it might be D) 30.00 percent.
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Tawna
6 months ago
I believe it's C) 27.50 percent.
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Wava
6 months ago
I think it's B) 13.33 percent.
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Precious
6 months ago
Why do you think it's 30.00 percent?
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Katy
6 months ago
I am leaning towards 30.00 percent
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Glen
6 months ago
Based on the data provided, it seems like the most reasonable option
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Precious
7 months ago
Why do you think it's 13.33 percent?
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Glen
7 months ago
I believe it was 13.33 percent
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Precious
7 months ago
I think the return on investment was 27.50 percent
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Blair
8 months ago
Ugh, I hate these ROI questions. Why can't they just ask something straightforward, like 'what's the square root of 144?' *sighs* Alright, let me re-work this. Okay, I think C is the right answer.
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Jovita
8 months ago
Wait, wait, wait. I think you're both overthinking this. Isn't ROI just (net income / total investment) * 100? So it would be ($525,000 / $500,000) * 100 = 105%. C is the right answer.
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Arleen
8 months ago
Hmm, I'm not sure about that. Wouldn't the ROI be calculated as net income divided by total investment? In that case, the ROI would be $525,000 / $500,000 = 1.05, or 105%. That would make C the right answer.
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Jame
8 months ago
Okay, let's walk through this step-by-step. Total revenue was $1,925,000, total investment was $500,000, and total expenses were $1,400,000. So the net income would be $525,000. Divide that by the total investment and you get 30% ROI. I'm going with D.
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Domonique
8 months ago
Let's see, the information we have is the total revenue, total investment, and total expenses. Shouldn't be too hard to figure out the ROI, right?
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Vicky
7 months ago
The ROI for Quest Co.'s Gold Division in 1993 is 13.33 percent.
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Gregg
7 months ago
Agreed. Let's use the formula ROI = (Net Income / Total Investment) * 100
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Loreen
7 months ago
I think we need to calculate the ROI first.
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Rhea
8 months ago
Ugh, this is a tricky one. I'm not sure if I have a good handle on how to calculate return on investment. Anyone have any thoughts on this?
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