Performing a Service for $500 Cash and $700 on Account

question 68

Multiple Choice

Performing a service for $500 cash and $700 on account would include a:

• A)debit to cash for $700.
• B)debit to service revenue for $700.
• C)credit to service revenue for $1,200.
• D)credit to accounts receivable for $700.

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Definitions:

Direct Labor

The cost associated with employees who directly contribute to the manufacturing or production of goods, redefined as the labor directly tied to the creation of a product.

Raw Material

The basic materials and substances that are used in the production of goods, typically transformed through manufacturing processes.

Property, Plant, and Equipment

Property, Plant, and Equipment refers to the long-term assets owned by a company, used in the production or supply of goods and services, and not intended for sale in the normal course of business.

Fixed Manufacturing Overhead

Indirect manufacturing costs that do not vary with the level of production, such as rent, property taxes, and insurance.