Unearned Revenues Are Generally

question 116

Multiple Choice

Unearned revenues are generally:

• A)Revenues that have been earned and received in cash.
• B)Revenues that have been earned but not yet collected in cash.
• C)Liabilities created when a customer pays in advance for products or services before the revenue is earned.
• D)Recorded as an asset in the accounting records.
• E)Increases to stockholders equity.

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Definitions:

Marginal Cost

is the cost incurred by producing one additional unit of a product or service.

Profits

The financial gain made in a transaction or operation, calculated as the difference between revenue and expenses.

Firm

A business organization, such as a corporation or partnership, that sells goods or services in exchange for revenue.

Profit-Maximizing Firm's Output

The output level at which a firm achieves the maximum possible profit, typically where marginal cost equals marginal revenue.