Which of the Following Situations Would Result in an Increase

question 2

Multiple Choice

Which of the following situations would result in an increase in income under the accrual method of accounting, but would NOT result in an increase in income under the cash- basis method of accounting?

• A)Receipt of cash for services that were performed earlier on credit
• B)Use of supplies purchased earlier
• C)Purchase of supplies for cash
• D)Performance of services on credit

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Definitions:

Budget Line

A visual depiction of every possible pair of two products that can be bought given specific income levels and product prices.

Stock Market

A marketplace where stocks, bonds, and other securities are bought and sold.

Borrow Money

The act of obtaining funds from another party with the promise of repaying the principal amount along with potential interest.

Buy Stocks on Margin

The practice of borrowing money from a broker to purchase stock, using the bought securities as collateral for the loan.