Under Accrual Accounting, Fees Received in Advance from Customers Should

question 22

Multiple Choice

Under accrual accounting, Fees received in advance from customers should be shown as being earned

• A) When cash is collected.
• B) When services are performed or goods delivered.
• C) When tax rates are low.
• D) When tax rates are high.

---

Definitions:

Total Assets

The total of everything of value owned by a company, including cash, investments, property, and equipment, as recorded on the balance sheet.

Operating Efficiency

A measure of how well a company uses its assets and liabilities internally to produce a profit.

Financial Efficiency

A measure of how well a company utilizes its assets and manages its liabilities to generate income, often assessed through ratios such as return on assets or equity.

EBIT

This metric, known as Earnings Before Interest and Taxes, calculates a business's profitability without taking into account expenses from interest and taxes.