Which of the Following Transactions Will Not Decrease the Net

question 100

Multiple Choice

Which of the following transactions will not decrease the net profit margin ratio?

• A)Accruing interest expense at year-end.
• B)The recording of depreciation expense.
• C)Using cash to pay for previously accrued wages.
• D)Accruing utilities expense at year-end.

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Definitions:

Commercial Substance

An occurrence in a transaction that causes a significant change in cash flow, indicating that the transaction has economic consequences.

Net Income

The company's earnings post all deductions, including expenses and taxes, from its overall revenues.

Deferred Tax Liability

This is a tax obligation that a company owes but can pay at a future date due to timing differences between its financial accounting and tax filing.

Deferred Tax Asset

An accounting asset representing the amount of taxes payable in future periods due to deductible temporary differences and carryforwards.