Asked by Caryse Janée on May 22, 2024
Verified
Which of the following transactions will increase the quality of income ratio?
A) Paying cash to suppliers.
B) Accruing sales revenue.
C) Selling treasury stock for more than its cost.
D) Collecting an account receivable.
Quality of Income Ratio
A financial metric that evaluates the ability of a company to translate its earnings into cash, reflecting the quality and sustainability of its earnings.
- Gain an understanding of the repercussions of transactions on financial indicators.
Verified Answer
LR
Lacey ReddickMay 25, 2024
Final Answer :
D
Explanation :
Collecting an account receivable is a positive transaction as it results in actual cash being received, which is considered higher quality income compared to accruals or non-cash transactions.
Learning Objectives
- Gain an understanding of the repercussions of transactions on financial indicators.
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