XYZ Coreceived $3,000 in Payments from Clients for Services Billed in in a Previous

question 80

Multiple Choice

XYZ Co.received $3,000 in payments from clients for services billed in a previous month.Which accounts will be affected and by what amounts under the accrual basis of accounting?

• A) Cash will increase by $3,000 and accounts receivable decrease by $3,000.
• B) Cash will increase by $3,000 and revenues will increase $3,000.
• C) Accounts receivable will increase by $3,000 and revenue will increase by $3,000.
• D) Accounts receivable will increase by $3,000 and cash will increase by $3,000.

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Definitions:

Dividends

Payments made by a corporation to its shareholder members, distributing a portion of the company’s earnings.

Expected Inflation Rates

The anticipated rate at which the general level of prices for goods and services will rise over a period of time.

Interest Rate

The percentage charged or paid for the use of money, typically expressed as an annual rate.

Inflation Adjustment

A modification made to the value of money to account for changes in purchasing power due to inflation.