Hamilton Lawn Service Earned $1,000 for Services Rendered

question 68

Multiple Choice

Hamilton Lawn Service earned $1,000 for services rendered.The customer promised to pay at a later time.What is the effect on accounts?

• A) Accounts receivable decreases; Owner's capital increases.
• B) Cash and Accounts receivable both increase.
• C) Cash account increases; Accounts receivable decreases.
• D) Accounts receivable increases; Owner's capital increases.

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Definitions:

Unit Product Costs

The total cost (including materials, labor, and overhead) to produce one unit of a product.

Predetermined Overhead Rate

An established rate used to assign overhead costs to products or job orders, calculated in advance based on anticipated costs and activities.

Special Order

An order typically outside the company's normal production that has unique requirements and pricing.

Excess Capacity

A situation where a company can produce more than is needed to meet the demand, often resulting in idle resources or underused assets.