A Business Receives $40,000 for Services That It Will Perform

question 131

Multiple Choice

A business receives $40,000 for services that it will perform over the next four months.Which of the following accounts is credited?

• A) Cash
• B) Accounts Payable
• C) Service Revenue
• D) Unearned Revenue

---

Definitions:

Salvage Value

The estimated value that an asset will realize upon its sale at the end of its useful life, after deducting the cost of removal or disposal.

Net Income

The total profit of a company after accounting for all expenses and income, indicating its financial performance over a specific period.

Incremental Cost

The additional cost that a company incurs when producing one additional unit of product or serving one additional customer.

Variable Overhead

Costs that fluctuate with production volume, such as utilities and indirect materials, which do not directly correlate to unit production.