Which of the Following Statements Is TRUE

question 28

Multiple Choice

Which of the following statements is TRUE?
I. A mutual fund pools money from many different investors and uses that money to invest in many different firms.
II. Mutual funds that are run by managers who try to pick the best performing stocks usually outperform the S&P 500.
III. Passive mutual funds do not try to select winning stocks; they mimic broader markets like the S&P 500.

• A) I only
• B) I and II only
• C) I and III only
• D) II and III only

---

Definitions:

Depreciation Expense

The deliberate apportionment of a tangible asset's cost over the period it is expected to be useful.

Useful Life

The estimated time period a fixed asset is expected to be usefully productive for a business.

Deferred Revenues

Income received by a company for goods or services not yet delivered or rendered, recorded as a liability on the balance sheet until earned.

Adjusting Entry

At the close of an accounting cycle, adjusting entries are recorded in the journal to apportion revenues and expenses to the time frame in which they were truly incurred.