Which of the Following Statements Is Correct

question 59

Multiple Choice

Which of the following statements is correct?

• A) Income that has been earned but not yet received is called accrued income.
• B) Unearned Subscription Income is a liability account.
• C) Under the accrual basis of accounting, revenue is recognized and recorded in the period when it is earned regardless of when cash related to the transaction is received.
• D) All of the above statements are correct.

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Definitions:

ROE

Return on Equity; a measure of financial performance calculated by dividing net income by shareholders' equity, indicating how much profit a company generates with the money shareholders have invested.

Debt

Debt represents money borrowed by one party from another, under the condition that it is to be paid back with interest, typically used for business operations or purchases.

Operating Leverage

A measure of how sensitive a company's operating income is to a change in its sales volume.

Labor-saving Equipment

Tools or machinery designed to reduce the amount of labor needed to perform a job, often leading to enhanced efficiency and lower labor costs.