Which of the following accounts would normally increase with an increase in sales and approximately in proportion to the sales increase?
A) Common stock
B) Inventory
C) Notes payable
D) Dividends

Question

Quizplus · Accepted Answer

An increase in sales would generally lead to an increase in inventory in order to meet the demand for the products being sold. Therefore, inventory is the account that would normally increase with an increase in sales and approximately in proportion to the sales increase. Common stock would not be affected by sales, notes payable may increase due to increased borrowing for expansion purposes unrelated to sales, and dividends are a distribution of profits that are not necessarily tied to sales.

Which of the Following Accounts Would Normally Increase with an Increase