medium · Investment Banking
Which of the following describes the impact of a $50 million increase in 'Deferred Revenue' on the three financial statements?
- No impact on IS; CFS Operating Cash Flow increases by $50 million; BS Cash increases and Liabilities increase by $50 million.
- Net income increases by 35 million after tax; CFO increases by 50 million; and the balance sheet still balances out.
- Revenue increases by $50 million on the income statement; cash increases on the balance sheet; and shareholders equity increases too.
- There is no impact on any of the three financial statements until the underlying revenue is actually recognized as earned by the company.
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