Which of the Following Statements About the Quality of Income

question 48

Multiple Choice

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

• A)An increase in operating assets and a decrease in liabilities will reduce operating cash flows and thereby reduce the quality of income ratio.
• B)Seasonal variations in sales and purchases of inventory can cause wide deviations in the quality of income ratio.
• C)When sales are growing,receivables and inventory normally increase at a faster rate than accounts payable,which often causes cash flows from operating activities to be less than net income.
• D)Aggressive revenue recognition tends to increase the quality of income ratio.

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Definitions:

Proportion

A numerical ratio or fraction that expresses the relationship between a part and the whole.

Ectoparasitic Infection

An infection or infestation caused by parasites that live on the outer surface of the host's body, such as fleas, lice, or ticks.

Pediculosis Pubis

An infestation of the pubic hair and skin with pubic lice, leading to itching and redness.

Protozoan Infection

An infection caused by protozoa, which are single-celled microscopic organisms.