Which One of the Following Adjustments Decreases Net Income for the Period

question 55

Multiple Choice

Which one of the following adjustments decreases net income for the period?

• A)Recognition of depreciation on plant assets
• B)Recognition of interest earned on a note receivable
• C)Recognition of services that had been provided to customers but the cash has not yet been received
• D)Recognition of rent earned that had been received in advance from customers

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Definitions:

Fixed Expenses

Costs that do not change with the level of production or sales over a short period of time, such as rent or salaries.

Break-Even Point

The level of production or volume of sales at which total costs and total revenue are equal, resulting in no net loss or gain.

Variable Expenses

Variable expenses fluctuate with business activity levels, such as materials and labor costs, which increase as production increases.

Fixed Expenses

Costs that do not vary with changes in production volume or sales, such as rent, salaries, and insurance.