A Credit That Is Realized Through an Entity's Ordinary Activities

question 117

Multiple Choice

A credit that is realized through an entity's ordinary activities would be treated as

• A) a gain.
• B) revenue.
• C) other income.
• D) other comprehensive income.

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Definitions:

Deferral

Recognition of revenue or expenses in a period different from when the transaction actually occurred, usually related to prepaid expenses or unearned revenue.

Recognition

Recognition in accounting refers to the formal acknowledgment of a transaction or event in the financial statements, often involving the recording of revenue or expense.

Expense

Costs incurred by a business in the process of earning revenues.

Deferral Adjusting Entry

An accounting entry made to defer revenue or expense to a future period.