Which of the Following Statements Is Correct

question 16

Multiple Choice

Which of the following statements is correct?

• A) When a future expense is paid in advance, the payment is normally recorded in a liability account called Prepaid Expense.
• B) Promises of future payment are called accounts receivable.
• C) Increases and decreases in cash are always recorded in the owner's capital account.
• D) An account called Land is commonly used to record increases and decreases in both the land and buildings owned by a business.
• E) Accrued liabilities include accounts receivable.

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Definitions:

Employee Turnover

Refers to the rate at which employees leave a company and are replaced by new employees over a certain period.

Compensation Expense

The total cost incurred by an employer to provide salaries, wages, and benefits to employees, recognized in the financial statements.

Performance-Based Stock Option Plan

A program that grants employees options to purchase a company's stock at a set price, contingent on meeting specific performance benchmarks.

Annual Average Increase

The average yearly growth rate of a variable, such as sales or revenue, often used to measure and project performance trends.