Which of the Following Statements Is CORRECT

question 159

Multiple Choice

Which of the following statements is CORRECT?

• A) If some cash flows occur at the beginning of the periods while others occur at the ends, then we have what the textbook defines as a variable annuity.
• B) The cash flows for an ordinary (or deferred) annuity all occur at the beginning of the periods.
• C) If a series of unequal cash flows occurs at regular intervals, such as once a year, then the series is by definition an annuity.
• D) The cash flows for an annuity due must all occur at the beginning of the periods.
• E) The cash flows for an annuity may vary from period to period, but they must occur at regular intervals, such as once a year or once a month.

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Definitions:

Income Summary

An account used in the closing process that summarizes revenues and expenses for a period before transferring the net income to retained earnings.

General Ledger

A complete record of all financial transactions over the life of a company, organized into debits and credits across various accounts.

Capital Account

An account showing the net changes in property ownership and transfer of payment among countries for international transactions, or in a company's context, represents the stake of owners in the firm.

Revenue Accounts

Accounts that record the income generated from the sale of goods and services, before any expenses are subtracted.