When a Company Delivers a Product or Service for Which

question 86

Multiple Choice

When a company delivers a product or service for which a customer has previously paid,the company records the following:

• A)A debit to a revenue account and a credit to a liability account.
• B)A debit to a revenue account and a credit to an asset account.
• C)A debit to an asset account and a credit to a revenue account.
• D)A debit to a liability account and a credit to a revenue account.

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Definitions:

Elastic

In economics, it describes a situation where the supply or demand for a good or service changes significantly when its price changes. High elasticity indicates that a slight price change could lead to a significant change in quantity demanded or supplied.

Percentage Change

A mathematical calculation that represents the degree of change over time, expressed as a percentage, to compare changes in quantities or measures.

Total Revenue

The comprehensive amount of financial earnings a company gathers from its sales and services over a designated period.

Elastic Demand Curve

A demand curve that indicates a high responsiveness or sensitivity of quantity demanded to a change in price.