Which of the Following Transactions Decreases the Quality of Income

question 124

Multiple Choice

Which of the following transactions decreases the quality of income ratio?

• A)The accrual of interest expense.
• B)Collecting cash on an account receivable.
• C)Selling inventory on account for a profit.
• D)Making a payment of principal on a loan.

---

Definitions:

Principal

The main party to a transaction, who has the primary responsibility, or in an agency relationship, the person for whom the agent acts.

Agent

A person authorized to act on behalf of another (known as the principal) in business transactions or other matters.

Transaction

An agreement or exchange between two or more parties that entails a transfer of goods, services, funds, or any other item of value.

Liable

Legally responsible or obligated to someone else under the law.