Which of the following transactions will not decrease the net profit margin ratio?
A) Accruing interest expense at year-end.
B) The recording of depreciation expense.
C)Using cash to pay for previously accrued salaries.
D)Accruing utilities expense at year-enD.Net profit margin = Net income ÷ Net sales (operating revenues). Previously accrued expenses have already been recognized and factored into net income; paying for these expenses impacts the balance sheet and not the income statement.

Question

Quizplus · Accepted Answer

Paying for previously accrued salaries does not affect the net profit margin ratio as these expenses have already been recognized in the previous period's financial statements. Hence, there is no impact on the current period's net profit margin ratio.

Which of the Following Transactions Will Not Decrease the Net