Which of the Following Items Would Be Recognised as a Liability

question 6

Multiple Choice

Which of the following items would be recognised as a liability?

• A) Advances from customers for goods and services to be provided next year
• B) Accumulated depreciation
• C) The estimated cost of maintenance of plant deferred from this year to next year
• D) Interest earned but not yet received

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Definitions:

Job-Order Costing

A cost allocation system used to assign production costs to individual products or batches, useful in manufacturing environments with customized orders.

Goods Sold

Refers to the products that have been sold and delivered to customers during a specific period.

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products, calculated at the beginning of the period based on estimated costs and activity levels.

Direct Labor-Hours

The total hours worked by employees who are directly involved in the manufacturing process or providing a service.