Which of the Following Transactions Decreases the Quality of Income

question 86

Multiple Choice

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

• A)The cash purchase of equipment.
• B)The issue of stock in exchange for cash.
• C)Collecting cash for services to be provided in the future.
• D)Earning revenue which was previously recorded as unearned revenue.

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Definitions:

Carbonate

The process of infusing water or another liquid with carbon dioxide gas to create carbonation, leading to what is commonly known as soda water, sparkling water, or fizzy drink.

Franchise Arrangements

Business models where a party (the franchisee) is allowed to use the trademark and business systems of another party (the franchisor) in return for a fee and adherence to specific operating principles.

Service-Sponsored Franchise Systems

A franchising approach where the franchisor provides a licensed privilege to the franchisee to do business and offers support services such as branding and training.

Wholesaler-Sponsored Voluntary Chains

Networks of independent retailers that voluntarily organize under a wholesaler to achieve economies of scale and marketing advantages.