Unearned Revenue Is a Liability That Is Settled in the Future

question 21

True/False

Unearned revenue is a liability that is settled in the future when a company delivers its products or services.

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Definitions:

Conversion Costs

The combined costs of direct labor and overhead expenses incurred to convert raw materials into finished goods.

Average Cost Method

An inventory costing method that calculates the cost of goods sold and ending inventory based on the average cost of all similar items in inventory, regardless of purchase date.

First-In, First-Out

An inventory valuation method assuming that goods are sold or used in the same order as they were purchased or produced.

Direct Labor

The work of employees that is directly associated with the production of goods or services.