Which of the Following Correctly Describes the Effects of Initially

question 35

Multiple Choice

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

• A) Revenues are increased.
• B) Liabilities are not affected.
• C)Retained earnings increases.
• D)Net income is not affecteD.Deferred revenues recorded when cash is received from a customer increases the unearned revenue account and increases cash. These are balance sheet accounts that do not impact net income.

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Definitions:

Time Horizon

The length of time over which an investment or a project is intended or expected to occur.

Price Elasticity

A quantification of the demand elasticity for a good relative to its price alterations.

Price Elasticity

An indicator of the sensitivity of the demand for a product to fluctuations in its price, represented by the percentage change.

Quantity Demanded

The specific amount of a product that buyers are willing to purchase at a given price, holding all other factors constant.