Which of the Following Statements About the Quality of Income

question 61

Multiple Choice

Which of the following statements about the quality of income ratio is correct?

• A)When sales are growing,receivables and inventory normally increase faster than accounts payable so the ratio increases.
• B)Seasonal variations in sales have no impact on the quality of income ratio.
• C)Failure to accrue appropriate expenses will inflate net income and reduce the quality of income ratio.
• D)The quality of income ratio is computed by dividing net income by cash flow from operating activities.

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