On October 1 of the Current Year, Wood Services Received

question 103

Multiple Choice

On October 1 of the current year, Wood Services received $15,000 for services to be performed evenly over the next 12 months. Wood Services initially recorded the $15,000 as unearned service revenue. The adjusting entry on December 31 of the current year will include a:

• A)debit to service revenue for $11,250.
• B)debit to service revenue for $3,750.
• C)debit to unearned service revenue for $3,750.
• D)debit to unearned service revenue for $11,250.

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Definitions:

Year 2

The second year in a series, timeline, or sequence, often referring to financial or operational periods.

Variable Costing

An accounting method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in product costs, excluding fixed overhead.

Net Operating Income

A financial metric that calculates how much profit a business generates from its regular operational activities, excluding non-operating income and expenses.

Operating Loss

A financial situation indicating a company's expenses have surpassed its revenue from operations, resulting in a negative operating income.