Which Is the Best Definition of a Perpetuity

question 145

Multiple Choice

Which is the best definition of a perpetuity?

• A) The interest rate charged per period multiplied by the number of periods per year.
• B) An annuity for which the cash flows occur at the beginning of the period.
• C) A constant stream of cash flows without end that is expected to rise indefinitely.
• D) An annuity in which the cash flows continue forever.
• E) A level stream of cash flows for a fixed period of time.

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Definitions:

Accrued Revenues

Revenues that have been earned by providing goods or services but have not yet been received or recorded.

Cash Receipts

Cash receipts are the records of all cash inflows, representing money received by a business, typically from its operational activities like sales or services.

Accrue Employee Salaries

The process of recognizing the cost of salaries earned by employees but not yet paid to them.

Salaries Expense

An income statement item representing the total amount paid to employees in the form of salaries and wages during an accounting period.