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
E)None of these answer choices is correct.

Question

Quizplus · Accepted Answer

An increase in the merchandise inventory account indicates that the company has purchased more goods to sell or produce, which will increase the cost of goods sold and lower the net income. However, it does not affect the cash from operating activities as it is a non-cash transaction. The other options (A, C, and D) all involve changes in accounts that affect the cash balance and net income in opposite directions, so they cannot cause net income to be more than cash from operating activities.

Which of the Following Independent Transactions Would Cause Net Income