Question

Some liability and net worth items increase spontaneously with increases in sales. Put a (check) by those items listed below that typically increase spontaneously:Accounts payable __________________ Mortgage bonds______________Notes payable to blanks _______________ Common stock ______________Accrued wages _______________ Retained earnings _____________Accrued taxes _______________

Answer 1

The items market as yes will increase with increase in sales.

1- Account payable - Yes

The more sales means more purchase and more purchase will in most cases increase a company payable.

2-Mortage bonds- NO

A mortgage bond is a bond backed by real estate holdings or real property. It has nothing to do with sales and companies operating activities.

3-Note payable to banks- Yes

The more sales means more purchase and more purchase will in most cases increase a company payable. Thus resulting increase in company notes payables.

4-Common stock-NO

Will remian same until new capital has been raised.

5- Accrued Wages -Yes

With increase in business activities accrued wages will also go up.

6- Retained Earning- Yes

More sales mean more profit thus resulting in increase retain earning.

7-Accrued Taxes- Yes

More profit means more tax vice versa.