Which of the Following Transactions Results in a Decrease in Both

question 54

Multiple Choice

Which of the following transactions results in a decrease in both total assets and net income?

• A)The accrual of salaries expense at year-end.
• B)Collecting cash from an account receivable.
• C)Recognizing revenue which was previously recorded as unearned revenue.
• D)Adjustment of the prepaid rent account for rent which expired during the period.

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Definitions:

Net Cash Flows

The difference between a company's cash inflows and cash outflows over a specific period.

Average Rate of Return Method

A technique used in capital budgeting to estimate the profitability of potential investments.

Consideration

Something of value given by both parties to a contract that induces them to enter into the agreement to exchange mutual performances.

Time Value

The concept that money available at the present time is worth more than the same amount in the future due to its potential earning capacity.