Which of the following is correct?
A)Deferred revenues are considered increases to stockholders' equity.
B)Working capital is measured as current liabilities minus current assets.
C)Working capital increases when a company pays the principal on a long-term note.
D)Deferred revenues will eventually become revenue earned.

Question

Quizplus · Accepted Answer

Deferred revenues are considered liabilities until the goods or services are delivered, at which point they become revenue earned. Therefore, option D is the correct statement. Option A is incorrect because deferred revenues are considered a liability, not an increase in equity. Option B is incorrect because working capital is measured as current assets minus current liabilities, not the other way around. Option C is incorrect because paying the principal on a long-term note would decrease a company's assets and liabilities and not affect working capital.

Which of the Following Is Correct