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Please explain your choice in detail. 12. Recall the Zynga Games case study discussed in lecture. Customers pay up front in cash for the right
Please explain your choice in detail.
12. Recall the Zynga Games case study discussed in lecture. Customers pay up front in cash for the right to access the gaming platform / digital world indefinitely. Suppose this online gaming platform currently assumes that each new customer will stay on its platform for 5 years, so it defers recording revenue, accordingly, over that expected length (i.e., every $10 purchase from a new customer is recognized as $2 of revenue per year for each of the following 5 years). Suppose that Zynga changes its accounting assumption, to assume that, now, customers will stay on the platform for only 2 years. All else equal, this assumption will...: (a) increase Revenues in the following year (b) decrease Revenues in the following year (c) increase Cash Flows from Operations in the following year (d) decrease Cash Flows from Operations in the following year (e) Multiple other answers (f) None of the other answersStep by Step Solution
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