A Company Receives a $50,000 Cash Deposit from a Customer

question 2

Multiple Choice

A company receives a $50,000 cash deposit from a customer on October 15 but will not deliver the goods until November 20.Which of the following statements is true?

• A)Cash will be reported on the statement of cash flows for the month of November.
• B)Revenue will be recorded and reported on the income statement for October.
• C)A liability will be reported on the balance sheet at the end of October.
• D)A prepaid asset will be reported on the balance sheet at the end of October.

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Definitions:

Aggregate Demand

The aggregate need for all products and services in an economy, measured at a specific price level and during a particular time frame.

Marginal Revenue

The additional income generated from selling one more unit of a product or service.

Demand Curve

A graph showing the relationship between the price of a product and the quantity of the product that consumers are willing and able to purchase at various prices.

Inverse Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded, with price as a function of quantity demanded.