Which of the Following Circumstances Would Result in a Decrease

question 15

Multiple Choice

Which of the following circumstances would result in a decrease in income under the accrual basis but would not result in a decrease in income under the cash basis?

• A)Purchase of inventory on account
• B)Payment of 2 months' rent in advance
• C)The expiration of prepaid rent
• D)The return of defective inventory purchased on account,where full credit was given
• E)The payment of the current period's utility bill

---

Definitions:

Expiration Date

The specific date on which an option contract becomes void and the rights to exercise it cease.

Right to Buy

A policy or statute that allows tenants to purchase the home they are renting, often at a discount, most commonly associated with public housing in the UK.

American Put

A type of put option that can be exercised at any time before its expiration, offering the seller protection against declining asset values.

European Put

A type of put option that grants the holder the right, but not the obligation, to sell a specific amount of an underlying asset at a predetermined price on the option's expiration date.