A Transaction Has Been Recorded in the T-Accounts of Gibbs $\begin{array}{cc}\text {Cash }\\\hline\begin{array}{ll|l}&1,500& \\\end{array}\end{array}$

question 34

Multiple Choice

A transaction has been recorded in the T-accounts of Gibbs Company as follows:
$\begin{array}{cc}\text {Cash }\\\hline\begin{array}{ll|l}&1,500& \\\end{array}\end{array}$
$\begin{array}{cc}\text {Unearned Revenue }\\\hline\begin{array}{ll|l}&&1,500 \\\end{array}\end{array}$
Which of the following could be an explanation for this transaction?

• A) Cash has been paid out to a company that will provide future services to Gibbs Company.
• B) Gibbs has completed services for which they had earlier received cash in advance.
• C) Gibbs has provided services to a customer on account.
• D) Gibbs has received cash for services to be provided in the future.

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Definitions:

Time-Driven Activity-Based Costing

An accounting method that assigns costs to products based on the estimated amount of time activities take and the cost of performing those activities.

Customer Cost Analysis

The process of examining and evaluating the costs associated with acquiring and supporting customers to determine profitability.

Customer Support Department

A division within a company that deals with customer inquiries, issues, and assistance requirements.

Time-Driven Activity-Based Costing

A method of costing that assigns costs to products or services based on the actual time taken to perform specific activities.