Net Income Would Decrease as a Result of Which of the Following

question 3

Multiple Choice

Net income would decrease as a result of which of the following adjustments:

• A)Adjusting an unearned revenue account
• B)Accruing a revenue
• C)Accruing an expense
• D)Billing a customer for services rendered

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Definitions:

Unobservable Inputs

Inputs for which market data are not available and that are developed using the best information available about the assumptions that market participants would use when pricing the asset or liability.

Fair Value Hierarchy

A system that prioritizes the inputs used in the valuation of assets and liabilities for financial reporting purposes.

Equity Instrument

is a financial instrument that evidences ownership interest in an entity, such as shares of common stock.

Exit Price

The amount that could be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.