The Adjusting Entry to Record the Amount Earned That Previously

question 240

Multiple Choice

The adjusting entry to record the amount earned that previously had been collected in advance will:

• A)increase liabilities and increase revenues.
• B)increase liabilities and decrease revenues.
• C)decrease liabilities and increase revenue.
• D)decrease liabilities and decrease revenues.

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Definitions:

Leverage

The use of various financial instruments or borrowed capital, such as debt, to increase the potential return of an investment.

Return On Stockholders' Equity

A measure of a company's profitability that calculates how many dollars of profit are generated for each dollar of shareholders' equity.

Accounts Receivable Turnover

A financial ratio that measures how many times a company can turn its accounts receivable into cash within a specific period.

Sales

The exchange of goods or services for money, constituting the primary source of revenue for most businesses.