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

question 41

Multiple Choice

On September 1,Peterson Maintenance Company contracted to provide monthly maintenance services for the next six months at a rate of $2,000 per month.The client paid Peterson $12,000 on September 1.Assuming Peterson records deferred revenues using the alternative treatment,what would be the entry on September 1?

• A)Debit Cash and credit Unearned Revenue for $12,000
• B)No entry is needed until the services are performed
• C)Debit Cash and credit Service Revenue for $12,000
• D)Debit Prepaid Maintenance and credit Cash for $12,000

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Definitions:

Production

The process of creating goods or services, involving tasks such as design, raw material procurement, fabrication, assembly, and testing.

Service Provider

A company or individual that offers services to others in exchange for payment, often in sectors like telecommunications, information technology, and healthcare.

Governments

Entities responsible for governing a geographic area and its population, including making and enforcing laws, managing public resources, and providing services to citizens.

Establishing Prices

The process of determining the selling price of goods or services, taking into account factors like costs, market demand, competition, and desired profit margins.