A Publishing Company Records the Subscriptions Paid in Advance by Its

question 8

Multiple Choice

A publishing company records the subscriptions paid in advance by its customers in an account called Unearned Subscription Revenue.If the company fails to make the end-of-period adjusting entry to record the portion of the subscriptions that have been earned,one effect will be:

• A)An overstatement of equity
• B)An overstatement of liabilities
• C)An understatement of assets
• D)An understatement of liabilities
• E)An overstatement of assets

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Definitions:

Conversion Costs

The sum of labor and overhead costs required to convert raw materials into finished products.

Equivalent Units

The product of the number of partially completed units and their percentage of completion with respect to a particular cost. Equivalent units are the number of complete whole units that could be obtained from the materials and effort contained in partially completed units.

Process Costing

A costing method used when homogeneous products are produced on a continuous basis.

Job-order Costing

A cost accounting system used to assign manufacturing costs to an individual product or batches of products, typically used in custom or varied production.