Under the Cash Basis of Accounting, an Amount Received from a Customer

question 93

Multiple Choice

Under the cash basis of accounting, an amount received from a customer in advance of providing the services would be reported as a(n) :

• A)revenue.
• B)liability.
• C)expense.
• D)prepaid expense.

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Definitions:

Casting

A manufacturing process 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 phase in manufacturing where components are put together to form a final product.

Predetermined Overhead Rates

Rates used to allocate manufacturing overhead costs to products or job orders, calculated based on estimated costs and activity levels.

Machine-Hours

A measure of production time that quantifies the number of hours machines are operated in the manufacturing process.