Reader,Inc

question 193

Multiple Choice

Reader,Inc.collected $12,000 in October 2011 from customers in exchange for 12-month subscriptions to its monthly magazine Reader.The October issue was the first issue of the subscription.How much revenue should the company report on its income statement for the year ended March 31,2012?

• A)$12,000
• B)$8,000
• C)$6,000
• D)No revenue will be recognized until all the magazines are delivered.

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Definitions:

Net Profit Margin

A financial ratio that shows the percentage of net income to revenue, indicating the efficiency at which a company converts sales into net profit.

Gross Margin

The difference between the sales revenue and the cost of goods sold, indicating the profitability of a company's core business activities.

Times Interest Earned

A financial ratio that measures a company's ability to meet its debt obligations based on its earnings before interest and taxes (EBIT).

Debt-To-Equity Ratio

A financial ratio that measures the degree to which a company is financing its operations through debt versus wholly owned funds.