Assuming Unearned Revenues Are Originally Recorded in Balance Sheet Accounts

question 131

Multiple Choice

Assuming unearned revenues are originally recorded in balance sheet accounts, the adjusting entry to record earning of unearned revenue is:

• A) Increase an expense; increase a liability.
• B) Increase an asset; increase revenue.
• C) Decrease a liability; increase revenue.
• D) Increase an expense; decrease an asset.
• E) Increase an expense; decrease a liability.

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Definitions:

Zero-Investment Portfolio

A portfolio strategy that involves creating a position without the need for initial capital by taking both long and short positions in stocks or other securities.

Net Investment

The total amount spent by a company on capital assets, such as plants and machinery, minus depreciation.

Nonsystematic Standard Deviation

A measure of the dispersion of returns on an investment due to factors specific to an individual asset or company, not the market.

Equally-Weighted Portfolio

An investment portfolio in which each asset is invested in with an equal amount of capital, providing diversification and reducing risk.