Rent of $4,000 Collected in Advance Was Recorded as Unearned

question 51

True/False

Rent of $4,000 collected in advance was recorded as unearned rent revenue.At the end of the accounting period,half the rent was earned.The related adjusting entry should be a credit to rent revenue for $2,000 and a debit to unearned rent revenue for $2,000.

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Definitions:

Physical Flow

The movement of physical goods and materials through a supply chain from suppliers to consumers.

Fixed-Period Inventory

A system of inventory management where stock levels are reviewed at set intervals and orders are placed as needed.

Economic Order Quantity

is a formula used to determine the optimal order size that minimizes the sum of ordering, holding, and stockout costs.

Inventory Carrying Costs

The total cost associated with holding inventory, including storage, handling, depreciation, and opportunity costs.