Which of the Following Is NOT an Accounting Method That

question 16

Multiple Choice

Which of the following is NOT an accounting method that would increase the current ratio (currently 2:1) ?

• A) Not adjusting prepaid insurance at year end
• B) Recognising unearned revenue as revenue
• C) Not recognising accrued wages
• D) Changing the method of depreciation

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Definitions:

Fiscal Year-End

The fiscal year-end is the conclusion of a 12-month or 52-week period over which a company or organization measures its financial performance.

Automatic Extension

An automatic extension grants taxpayers additional time to file their tax returns without the need for an explanation.

Return

The document filed with the IRS that reports income, expenses, and other pertinent tax information. Returns are required by law to be filed annually for an individual or business with reportable income.

Earnings and Profits

A measure used for tax purposes to determine a corporation's ability to pay dividends to its shareholders out of its net assets.