Planners Have Determined That Sales Will Increase by 20% Next

question 46

Multiple Choice

Planners have determined that sales will increase by 20% next year,and the profit margin will remain at 10% of sales.Which one of the following statements is correct if the payout ratio remains at 30%?

• A) Net income will increase by 10% next year.
• B) The addition to retained earnings will increase by 20% next year.
• C) The dividend will increase by 6% next year.
• D) The addition to retained earnings will equal 6% of the sales increase next year.

Understand how taxable income is calculated and the impact of filing status, deductions, and exemptions on this calculation.

Gain knowledge about specific conditions under which certain tax statuses can be claimed.

Learn the significance of adjusted gross income (AGI) in determining deductions and credits.

Familiarize with the consequences of failing to file tax returns and the associated penalties.

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Definitions:

Tax Rates Change

Adjustments made by the government to the percentage at which income, corporate profits, or other bases are taxed, which may affect individuals, corporations, and valuation of investments.

GAAP

Generally Accepted Accounting Principles, which are a common set of accounting principles, standards, and procedures that companies must follow when they compile their financial statements.

Asset Approach

A valuation method that estimates a company's value based on the total value of its assets minus its liabilities.

Liability Approach

A method in accounting that emphasizes recording all financial liabilities at their current value to ensure accurate financial reporting.