Which of the Following Situations Typically Results in Unearned Revenues

question 58

Multiple Choice

Which of the following situations typically results in unearned revenues?

• A) charging customers a deposit for returnable containers
• B) short-term zero-interest notes payable
• C) providing manufacturer warranties
• D) selling magazine subscriptions

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Definitions:

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the average cost of production falls with increasing output.

Constant Returns to Scale

A situation in production where increasing the input of all resources by any proportion yields an increase in output by the same proportion.

Long-run Average Total Cost

The per unit cost of production when all inputs, including capital, are variable, assuming optimal efficiency.

Economies of Scale

Describe the cost advantages that enterprises obtain due to the scale of their operations, typically resulting in reduced costs per unit with increased output.