A Delivery Company Is Creating a Balance Sheet

question 20

Multiple Choice

A delivery company is creating a balance sheet. Which of the following would most likely be considered a short-term liability on this balance sheet?

• A) the depreciation over the last year in the value of the vehicles owned by the company
• B) revenue received for the delivery of items that have not yet been delivered
• C) a loan which must paid back in two years
• D) prepaid rent on the offices occupied by the company

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Definitions:

Straight-Line Method

A method of calculating depreciation or amortization by evenly spreading the cost over the useful life of the asset.

Gross Profit Rate

A financial metric that represents the percentage of revenue that exceeds the cost of goods sold.

Perpetual Inventory Method

A system of inventory management where updates are made continuously to account for additions to and subtractions from inventory, showing real-time inventory levels.

Partial Equity Method

An accounting method used when an investing entity holds a significant but not controlling interest in another entity, recording the investment at cost and recognizing a proportionate share of the investee's earnings.