Which of the Following Correctly Describes the Impact of Collecting

question 33

Multiple Choice

Which of the following correctly describes the impact of collecting cash from customers for services to be provided in the future?

• A)Assets and stockholders' equity increase.
• B)Assets and revenues increase.
• C)Assets and liabilities increase.
• D)Assets and operating income increase.

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Definitions:

Spot Rate

The existing market cost at which a specific asset is available for purchase or sale for instant delivery.

Forward Rate

The exchange rate specified in a forward exchange contract.

Premium

An amount paid for an insurance policy or an amount paid above the face value of a bond.

Cash Flow Hedge

A hedge of the exposure to the variability in cash flows that is attributable to a particular risk that is associated with all, or some component of, a recognized asset or liability or a highly probable forecast transaction and could affect profit or loss.