Which of the Following Independent Transactions Would Cause Net Income

question 6

Multiple Choice

Which of the following independent transactions would cause net income to be more than cash from operating activities?

• A) A decrease in the accounts receivable account
• B) An increase in the merchandise inventory account
• C) An increase in the accounts payable account
• D) An increase in the accrued wages payable account

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Definitions:

Retention Ratio

The proportion of net income that is retained in the business rather than paid out to shareholders, indicating the company's reinvestment rate.

Dividend Yield

A stock’s cash dividend divided by its current price.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue.

Reverse Stock Split

A corporate action in which a company reduces the total number of its outstanding shares to increase its share price.