Question: Return on equity (ROE) is measured by Profit / Average total equity Assume ROE is less than 100% and that the cash balance remains positive.

Return on equity (ROE) is measured by Profit / Average total equity

Assume ROE is less than 100% and that the cash balance remains positive.

State the effect the following event occurring on the reporting date would have on this ratio.

EVENT: An adjustment for an accrued expense

No change

Increase

Decrease

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