On December 31,2016,the Balance in Pinnacle Exploration Company's Unearned Revenue

question 173

Multiple Choice

On December 31,2016,the balance in Pinnacle Exploration Company's Unearned Revenue account was a credit of $6,000.In January,2017,the company received an advance payment of $14,000 from a new customer for services to be performed.By January 31,adjustments were made to recognize $4,000 of the revenue that had been earned during January.What was the balance in Unearned Revenue on January 31,2017?

• A)$4,000 credit
• B)$14,000 debit
• C)$6,000 credit
• D)$16,000 credit

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Definitions:

Processing Activity

Refers to operations or work performed in a systematic sequence to alter materials or information.

Activity-Based Costing

An accounting method that identifies and assigns costs to specific activities, making it easier to accurately measure the cost and performance of particular activities.

Machine-Hours

A measure of production time that refers to the number of hours a machine is in operation.

Activity Rate

It is a measure used in activity-based costing to allocate overhead costs to products or services, based on the activities that go into producing them.