Which of the following indicates that gift cards have not yet been redeemed and may affect the financial statements?

Breakage refers to the portion of gift cards that are sold but not redeemed by customers. It represents potential revenue that the business expects to realize but has not yet collected because the customers did not use their gift cards. In terms of financial statements, breakage can impact revenue recognition and liabilities. When gift cards are sold, they create a liability for the business until they are redeemed. If there is a significant amount of breakage, it means that the business can recognize some revenue from these unredeemed cards over time, thus affecting how revenue and liabilities are reported.

Consequently, recognizing breakage is essential for accurate financial reporting. It allows businesses to adjust their revenue projections and manage their liabilities more effectively, thus giving stakeholders a clearer picture of the financial health of the restaurant. Other concepts, like sales and foregone revenue, do not specifically pertain to unredeemed gift cards and their effects on the financial statements in the same way that breakage does. Liabilities certainly relate to gift cards because they represent amounts owed to customers until the cards are used; however, breakage specifically captures the essence of unredeemed cards.