Which One of the Following Errors Causes Net Income to Be

question 32

Multiple Choice

Which one of the following errors causes net income to be overstated?

• A) Failure to record collection of an account receivable
• B) Failure to record depreciation expense
• C) Failure to accrue revenue earned but not billed
• D) Failure to record fees received in advance that are earned by the end of the period

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Definitions:

Return on Investment (ROI)

A measure used to evaluate the efficiency or profitability of an investment, calculated by dividing the profit of an investment by its cost.

Investment Center A

A segment or area of a business responsible for its own revenue, expenses, and assets, with its performance measured by its ability to generate income relative to its invested capital.

Income Data

Financial information that shows the revenues earned and expenses incurred by a business over a period of time.

Asset Data

Information about the resources owned by a business, which have economic value and can contribute to generating income.