Which of the Following Transactions Does Not Create a Deferral

question 94

Multiple Choice

Which of the following transactions does not create a deferral?

• A)Paying cash to purchase a three-month insurance policy.
• B)Receiving cash from a customer for services to be provided in the future.
• C)Paying cash to employees for wages they have earned.
• D)Paying cash to purchase a two-month supply of office supplies.

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Definitions:

Net Sales

Net Sales is the total revenue from sales of goods or services, after deducting returns, allowances for damaged or missing goods, and discounts.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a specific period, indicating the efficiency of inventory management.

Ending Inventory

The final valuation of goods available for sale after accounting for all additions and subtractions during a financial period.

Beginning Inventory

The value of all the inventory that a company has at the start of an accounting period before any purchases or sales are made.