How will decreases in the following items affect residual income?
$\begin{array} { l c c } & \text { Decrease in Expenses } & \text { Decrease in Inventnry } \\end{array}$
A) $\begin{array} { l c c } & \text { Decrease RI } &&&&&& \text { Decrease RI } \\end{array}$
B) $\begin{array} { l c c } & \text { Decrease RI } &&&&&& \text { Increase RI } \\end{array}$
C) $\begin{array} { l c c } & \text { Increase RI } &&&&&& \text { Decrease RI } \\end{array}$
D) $\begin{array} { l c c } & \text { Increase RI } &&&&&& \text { Increase RI } \\end{array}$

Question

How will decreases in the following items affect residual income?
 $\begin{array} {  l  c c  } & \text { Decrease in Expenses } & \text { Decrease in Inventnry } \\end{array}$
A) $\begin{array} {  l  c c  } & \text { Decrease RI } &&&&&& \text { Decrease RI } \\end{array}$
B) $\begin{array} {  l  c c  } & \text { Decrease RI } &&&&&& \text { Increase RI } \\end{array}$
C) $\begin{array} {  l  c c  } & \text { Increase RI } &&&&&& \text { Decrease RI } \\end{array}$
D) $\begin{array} {  l  c c  } & \text { Increase RI } &&&&&& \text { Increase RI } \\end{array}$

Quizplus · Accepted Answer

A decrease in expenses increases residual income as it improves net income. A decrease in inventory can also increase residual income by reducing holding costs and potentially improving cash flow.

How Will Decreases in the Following Items Affect Residual Income Decrease in Expenses Decrease in Inventnry \begin{array} { l c c } & \text { Decrease in Expenses } & \text { Decrease in Inventnry } \\\end{array}​ Decrease in Expenses ​ Decrease in Inventnry ​

How Will Decreases in the Following Items Affect Residual Income $\begin{array} { l c c } & \text { Decrease in Expenses } & \text { Decrease in Inventnry } \\\end{array}$