Which of the Following Statements Best Describes the Effects of Recognizing

question 87

Multiple Choice

Which of the following statements best describes the effects of recognizing revenue earned by a business entity?

• A)Assets increase only when cash sales are collected.
• B)Stockholders' equity increases only when credit sales are made.
• C)Assets and stockholders' equity increase when either cash or credit sales are made.
• D)Assets increase and stockholders' equity decreases when either cash or credit sales are made.

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Definitions:

Ginnie Mae

Ginnie Mae, or the Government National Mortgage Association, guarantees timely payment of principal and interest on mortgage-backed securities.

Sallie Mae

A corporation that originates, services, and collects student loans in the United States.

Default Risk Premiums

The additional yield a bond issuer must pay to compensate investors for the risk that the issuer might not make payments as promised.

Yield

The yield from an investment, including interest or dividends, represented as a percentage of the cost of the investment or its present market worth.