All Else Equal, a Large Increase in Deferred Revenue in the Current

question 62

Multiple Choice

All else equal, a large increase in deferred revenue in the current period would be expected to produce what effect on revenue in a future period?

• A) Large increase, because deferred revenue becomes revenue when the seller has satisfied its performance obligations.
• B) Large decrease, because deferred revenue implies that less revenue has been earned, which reduces future revenue.
• C) No effect, because deferred revenue is a liability, so payment will use assets rather than providing revenue.
• D) Large decrease, because deferred revenue indicates collection problems that will reduce net revenues in future periods.

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Definitions:

MNCs

Multi-National Corporations, which are companies that operate in multiple countries beyond their home country.

Culture

A collection of common beliefs, objectives, behaviors, and values that defines a group, organization, or institution.

Host-country Complaints

Grievances or objections raised in the country where a foreign business operates, often related to the business's practices.

Multinational Corporations

Large companies that operate and provide goods or services in multiple countries beyond their home country's borders.