On September 1,Advantage Maintenance Company Contracted to Provide Monthly Maintenance

question 191

Multiple Choice

On September 1,Advantage Maintenance Company contracted to provide monthly maintenance services for the next ten months at a rate of $2,400 per month.The client paid Advantage $24,000 on September 1.The maintenance services began on that date.Assuming Advantage records deferred revenues using the alternative treatment,what would be the adjusting entry recorded on December 31?

• A) No entry is needed since revenue was recorded on September 1.
• B) Debit Service Revenue and credit Unearned Revenue for $14,400
• C) Debit Service Revenue and credit Unearned Revenue for $24,000
• D) Debit Unearned Revenue and credit Service Revenue for $9,600

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Definitions:

Costs

Costs represent the expenses incurred in the production of goods or services, including materials, labor, and overhead.

Benefits

Advantages or favorable outcomes derived from actions, policies, or circumstances.

Assumption

A basic condition or premise believed to be true without proof for the purpose of reasoning and decision-making.

Hypothesis

A suggested theory formulated from minimal evidence intended as an initial step for more in-depth inquiry.