ServicePro Provides Two Kinds of Services

question 90

Multiple Choice

ServicePro provides two kinds of services. During the most recent accounting period, the two service lines produced the following operating results: If the company stops providing Service 2:

• A) The company's income will decrease by $1,500 per year.
• B) The company's income will increase by $1,500 per year.
• C) The company's income will decrease by $3,500 per year.
• D) The company's income will increase by $3,500 per year.

---

Definitions:

Calendar Year

A one-year period that begins on January 1 and ends on December 31, used as a financial and administrative period for many purposes.

Accrued Expense

Expenses that have been incurred but not yet paid or recorded in the financial statements.

Adjusting Entry

An entry made in the accounting records at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.

Unearned Rent

Income received before the period to which it applies, requiring deferred revenue recognition until the service (rental period) is provided.