Customer Deposits (Prepayments) Are Recorded -

question 20

Multiple Choice

Customer deposits (prepayments) are recorded -

• A) as debits to accounts receivable for the customer
• B) as negative sales invoices
• C) as credits to accounts receivable for the customer
• D) when the customer makes a partial payment on account

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Definitions:

Direct Labor-Hour

A measure of the work effort contributed by labor to produce goods, often used as a basis for assigning manufacturing overhead to products.

Predetermined Overhead Rate

A rate established before the period begins, used to allocate overhead costs to products or job orders based on a consistent activity measure.

Forming Department

A section within a manufacturing facility where raw materials are shaped into products or parts.

Machine-Hour

A unit of measure representing the operation of a machine for one hour, often used in allocating manufacturing overhead.