Recording Service Revenue on Account as a Cash Transaction Will

question 161

Multiple Choice

Recording service revenue on account as a cash transaction will cause:

• A)accounts receivable to be overstated.
• B)owner's equity to be understated.
• C)cash to be overstated.
• D)service revenue to be understated.

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Definitions:

Overhead Cost

Expenses not directly tied to the production of goods or services, such as rent, utilities, and administrative expenses.

Activity-Based Costing

A costing method that assigns overhead and indirect costs to specific activities, improving the accuracy of product and service costing.

Manufacturing Overhead

All indirect costs associated with the manufacturing process, such as factory rent, utilities, and salaries of indirect labor.

Activity-Based Costing

A method of costing that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption.