Subtracting a Decrease in Unearned Revenue from Net Income Eliminates

question 193

Multiple Choice

Subtracting a decrease in Unearned Revenue from net income eliminates the effect of recording revenue that:

• A) increased net income, but did not impact cash this period.
• B) decreased net income, but did not impact cash this period.
• C) increased net income and increased cash flow this period.
• D) decreased net income and decreased cash flow this perioD.
• Subtracting decreases in current liabilities eliminates the effects of transactions that increased net income but did not affect cash. For example, a company decreases Unearned Revenue and increases net income in the current period when it fulfills its prior obligations to provide services, but cash is not affecteD.

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Definitions:

Inflation Rate

The percentage increase in the price level of goods and services over a period of time, often measured annually.

Government Debt

The total amount of money that a government has borrowed and not yet repaid.

Debt To Income Ratio

A personal finance measure comparing an individual's debt payments to their overall income, often used by lenders to assess borrowing capacity.

Government Debt

The total amount of money that a government owes to creditors, which can include foreign governments, domestic banks, and other financial institutions.