A Company Sells Magazines and Collects Subscription Fees Prior to the Publication

question 122

Multiple Choice

A company sells magazines and collects subscription fees prior to the publication and distribution of the magazine.Which of the following correctly describes the impact on the financial statements when cash is received in advance from customers?

• A)Current assets increase and gross profit increases.
• B)Current liabilities aren't affected and stockholders' equity isn't affected.
• C)Current assets increase and stockholders' equity increases.
• D)Current liabilities increase and gross profit is not affected.

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Definitions:

Personality Trait

Relatively stable and enduring patterns of thought, feeling, and behavior that characterize an individual's responses across a variety of situations.

Growth-Promoting Climate

An environment characterized by support, understanding, and encouragement, fostering personal development and growth.

Rogers

Refers to Carl Rogers, an influential psychologist known for developing the person-centered approach to therapy and the concept of unconditional positive regard.

Relaxing

Engaging in activities or practices that reduce tension and stress, leading to a state of calm and ease.