Austin Financial Recently Announced That Its Net Income Increased Sharply

question 123

Multiple Choice

Austin Financial recently announced that its net income increased sharply from the previous year,yet its net cash provided from operations declined.Which of the following could explain this performance?

• A) The company's dividend payment to common stockholders declined.
• B) The company's expenditures on fixed assets declined.
• C) The company's cost of goods sold increased.
• D) The company's depreciation expense declined.
• E) The company's interest expense increased.

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Definitions:

Depreciated

The decrease in the value of an asset over time, typically due to wear and tear or obsolescence.

Equipment

Tools, machinery, or other apparatus necessary for the manufacture of goods, provision of services, or office operations.

Accrued Expense

An expense that has been incurred but not yet paid for.

Adjusting Entry

A journal entry made at the end of an accounting period to account for unrecorded transactions or to adjust incorrect entries.