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

question 179

Multiple Choice

On September 1,Capitol Maintenance Company contracted to provide monthly maintenance services for the next seven months at a rate of $2,300 per month.The client paid Capitol $16,100 on September 1.The maintenance services began on that date.Assuming Capitol 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 $6,900
• C)Debit Service Revenue and credit Unearned Revenue for $16,100
• D)Debit Unearned Revenue and credit Service Revenue for $9,200

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Definitions:

GDP Deflator

An economic measure that converts output measured at current prices into constant-dollar terms, helping to distinguish between real growth and inflation.

Inflation

The tempo at which the cost of general goods and services escalates, undermining the ability to purchase as time progresses.

Expenditures Approach

A method of computing a country's gross domestic product (GDP) by adding up total consumption, investment, government spending, and net exports.

GDP

Gross Domestic Product, a measure of the economic output of a country within a specified period of time.