The Adjusting Entry to Recognize Work Completed on Unearned Revenue

question 155

Multiple Choice

The adjusting entry to recognize work completed on unearned revenue involves which of the following?

• A) An increase in assets and a decrease in liabilities
• B) An increase in liabilities and a decrease in stockholders' equity
• C) A decrease in liabilities and an increase in stockholders' equity
• D) A decrease in assets and a decrease in liabilities

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Definitions:

Dividend Practices

Refers to corporate policies and strategies regarding the distribution of profits to shareholders in the form of dividends.

Earnings in Dividends

This term is not standard; likely refers to the portion of a company's earnings distributed to shareholders in the form of dividends.

Residual Dividend Policy

A strategy whereby companies pay dividends from the residual or leftover equity only after all project capital needs are met.

Dividend Payout Ratio

The fraction of net income a firm pays to its shareholders in dividends, expressed as a percentage of the company's total net income.