Which of the Following Circumstances Would Result in an Increase

question 91

Multiple Choice

Which of the following circumstances would result in an increase in income under the cash basis and an increase in income under the accrual basis?

• A)The return of defective inventory purchased on account,where full credit was given
• B)Cash collection from a credit customer
• C)The cash sale of inventory at a sales price in excess of cost
• D)The expiration of prepaid rent
• E)The sale of inventory on account,at a sales price in excess of cost

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Definitions:

Marginal Revenue

The additional income earned by selling one more unit of a good or service.

Marginal Costs

The change in total production cost that arises when the quantity produced is incremented by one unit.

Investment

The allocation of resources, usually money, in order to gain profitable returns as interest, income, or appreciation in value.

Workers

Individuals who perform tasks or jobs for pay, ranging from manual labor to professional occupations.