Collection of a $1,000 Accounts Receivable

question 42

Multiple Choice

Collection of a $1,000 Accounts Receivable

• A) increases an asset $1,000; decreases an asset $1,000.
• B) increases an asset $1,000; decreases a liability $1,000.
• C) decreases a liability $1,000; increases stockholders' equity $1,000.
• D) decreases an asset $1,000; decreases a liability $1,000.

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Definitions:

Direct Labor-Hours

The total hours of work directly involved in manufacturing goods or delivering services, often used as a basis for allocating overhead.

Casting

A process in manufacturing where a liquid material is poured into a mold which contains a hollow cavity of the desired shape and then allowed to solidify.

Assembly

The process of putting together various components or materials to create a finished product.

Predetermined Overhead Rates

An estimated rate used to allocate manufacturing overhead costs to individual products or job orders based on a chosen activity base.