Which of the Following Adjustments Would Require Decreasing the Liabilities

question 81

Multiple Choice

Which of the following adjustments would require decreasing the liabilities reported on the statement of financial position?

• A) A company uses $400 worth of supplies during the year.
• B) A company records $400 worth of depreciation on equipment.
• C) A company has earned $400 of revenue collected at the beginning of the year.
• D) A company records $400 of wages earned by employees that will be paid next year.

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Definitions:

Sellers

Individuals or entities that offer goods or services for sale in the marketplace.

Progressive

A term describing a tax system where the tax rate increases as the taxable amount increases, or broadly referring to policies or principles aiming at promoting social advancement.

Regressive

A term often used in taxation that describes a situation where the tax rate decreases as the taxable amount increases, placing a heavier burden on lower-income individuals.

Transfer Payments

Transfer payments are the distributions of money by the government to individuals without the requirement of goods or services in return, such as welfare or social security.