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 wages.
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

This transaction does not affect the net profit margin ratio because cash payment of previously accrued wages does not impact the income statement or net income. It only affects the balance sheet accounts. A, B, and D would decrease the net profit margin ratio because they increase expenses and reduce net income.

Which of the Following Transactions Will Not Decrease the Net