Which of the Following Is Not an Application of Accrual

question 107

Multiple Choice

Which of the following is not an application of accrual accounting?

• A)Recording advertising fees earned at the time the work is done.
• B)Adjusting unearned advertising fees to the proper balance at the end of the month.
• C)Recording advertising fees earned at the time the cash payment is received.
• D)Recording telephone expense in the accounting period covered by the monthly bill.

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Definitions:

Defective

Pertaining to a product or thing having flaws, faults, or imperfections.

Potential Buyers

Individuals or organizations that might be interested in purchasing a product or service.

Warranties

Guarantees issued to the purchaser of a product by its manufacturer or seller, promising repair or replacement within a certain period if necessary.

Adverse Selection

A situation where there is an imbalance in information that results in high-risk parties being more likely to engage in transactions than low-risk parties, often observed in insurance markets.