In the Percent-Of-Sales Method If (A/S₁) and L/S₁) Both Increase

question 20

Multiple Choice

In the percent-of-sales method if (A/S₁) and L/S₁) both increase

• A) RNF stays the same.
• B) RNF goes down.
• C) RNF goes up.
• D) more information is needed.

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Definitions:

Cash Flow

The net amount of cash being transferred into and out of a business, considered in terms of operating, investing, and financing activities.

Operating Activities

Business actions directly related to the production and delivery of goods and services, forming the primary revenue-producing activity of an entity.

Cash Flow Statement

A financial statement that tracks the flow of cash in and out of a business, highlighting its operating, investing, and financing activities during a specific period.

Cash Flow Classifications

Categorization of cash inflows and outflows into activities such as operating, investing, and financing, to provide insights into a company's cash generation and spending patterns.