In Each of the Last Five Years, the Net Sales

question 23

Multiple Choice

In each of the last five years, the net sales of Plaza Co. have increased at about half the rate of inflation, but net income has increased at approxi?mately twice the rate of inflation. During this period, the company's total assets, liabilities, and equity have remained almost unchanged; dividends are approximately equal to net income. These relationships suggest (indicate all correct answers) :

• A) Management is successfully controlling costs and expenses.
• B) The company is selling more merchandise every year.
• C) The annual return on assets has been increasing.
• D) Financing activities are likely to result in a net use of cash.

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Definitions:

World-Wide Fame

Recognition, admiration, or distinction achieved globally across different cultures and countries.

Illusory Correlation

The phenomenon of perceiving a relationship between variables (typically people, events, or behaviors) even when no such relationship exists.

Spotlight Effect

This refers to the tendency to overestimate how much other people notice about us, especially our appearance and behavior.

Fundamental Attribution

The tendency to overestimate the influence of personality traits and underestimate the influence of situational factors when evaluating someone else's behavior.