Which of the Following Correctly Describes the Effects of Initially

question 97

Multiple Choice

Which of the following correctly describes the effects of initially recording deferred revenue when cash is received from a customer?

• A)Revenue is increased.
• B)Liabilities are not affected.
• C)Retained earnings increases.
• D)Net income is not affected.

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Definitions:

Monetarists

Economists convinced that changes in the volume of money supply have pivotal effects on national output in the short term and on price levels in a longer-term perspective.

Rational Expectations

An economic theory which proposes that individuals make decisions based on their rational outlook, available information, and past experiences.

Ascribing Rationality

The assumption that individuals make decisions based on rational thought processes, maximizing utility based on available information.

Velocity of Circulation

The rate at which money is exchanged in an economy, reflecting the frequency with which money is spent on goods and services.