A Man Moves from a Large City to a Small

question 55

Multiple Choice

A man moves from a large city to a small town.  In the small town he seems like a very different person than the person he was in the big city.  For instance, he is more polite in the small town than he was in the big city.  This could be because

• A)the costs of his being impolite are higher in the big city than in the small town.
• B)the costs of his being impolite are higher in the small town than in the big city.
• C)he is a happier person in the large city and it could be that happier people are more polite.
• D)the costs of his being impolite are the same in the big city as in the small town.

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Definitions:

Unearned Service Revenue

Income received in advance for services that have not yet been performed, considered a liability until the service is delivered.

Adjusting Entries

Adjustments in accounting records at the end of a period to correctly distribute incomes and costs to the period they pertain to.

Prepaid Rent

Payments made in advance for rent, recorded as an asset on the balance sheet until it is consumed over time and moved to expense.

Prepaid Expenses

Payments made in advance for goods or services, which are recorded as an asset until they are consumed or used.