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The Accountant of Isabella Consulting Company Failed to Make an Adjusting

question 145

Multiple Choice

The accountant of Isabella Consulting Company failed to make an adjusting entry to record $6,000 for unearned service revenues that were earned before the end of the fiscal year. Assume the company initially recorded a liability. Which of the following statements is true?


Definitions:

Fixed Component

A portion of costs within a business that remains constant, regardless of the level of production or business activity.

Overapplied

typically refers to when overhead costs allocated to products exceed the actual overhead costs incurred, leading to a variance in cost accounting.

Budget Variance

The difference between budgeted amounts and actual amounts spent or earned, used to assess financial performance against projections.

Volume Variance

A difference between actual and budgeted sales or production volumes, impacting costs and profitability.

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