All of the Following Are True Regarding Unearned Revenues Except

question 66

Multiple Choice

All of the following are true regarding unearned revenues except:

• A)They are payments received in advance of services performed.
• B)The adjusting entry for unearned revenues increases assets and increases revenues.
• C)The adjusting entry for unearned revenues increases revenues and decreases liabilities.
• D)They are liabilities.
• E)As they are earned,they become revenues.

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Definitions:

Optimal Amount

The most efficient, beneficial, or ideal quantity of a good, service, or resource allocation under given circumstances.

Perfectly Elastic

Describes a situation in economics where the quantity demanded or supplied changes infinitely in response to any change in price.

Interest-Rate Cost-Of-Funds

The cost incurred by financial institutions to raise funds that they can then lend to customers, influenced by prevailing interest rates.

Market Interest Rates

The prevailing rate at which borrowers and lenders agree to engage in transactions of debt securities in the financial markets.