Which of the Following Statements Is False

question 36

Multiple Choice

Which of the following statements is false?

• A)A liability is created when cash is received prior to delivery of the goods or services.
• B)Revenue is recognized at the time of delivery of the goods or services if cash is received.
• C)Revenue isn't recognized at the time of delivery of goods and services if cash is received after delivery of the goods and services.
• D)Collecting cash after delivery of a good or service does not create revenue on the income statement as of the date of collection.

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Definitions:

Internal Revenue Code

The comprehensive set of tax laws in the United States, governed by the Internal Revenue Service (IRS), that dictates federal tax obligations.

Federal Income Taxes

Taxes imposed by the federal government on the annual earnings of individuals, corporations, trusts, and other legal entities.

Corporations

Legal entities that are separate and distinct from their owners, with the ability to own assets, incur liabilities, and sell stock.

Double Taxation

A taxation principle referring to income taxes paid twice on the same source of income. This usually occurs with corporate income taxed at both the corporate level and again at the shareholder level on dividends.