Marcy's Event Planning Services Company Records Deferred Expenses and Deferred

question 138

True/False

Marcy's Event Planning Services Company records deferred expenses and deferred revenues using the alternative treatments.The business makes adjusting entries as needed to bring its books to the full accrual basis once a year at the end of the year.On October 1,Marcy's paid $3,600 for insurance for a one-year period.Coverage begins on October 1.At the end of the year,it will make an adjusting entry that debits Insurance Expense for $1,500.

---

Definitions:

Indirect Expenses

Costs that are not directly tied to the production of goods or services, such as administrative salaries, rent, and utilities.

Cost Center

A business unit or department within an organization that does not directly generate revenue but incurs costs, and its performance is evaluated based on cost control.

Investment Center

An investment center is a business unit or division within an organization that is responsible for its own revenues, expenses, and assets, and its performance is often evaluated based on return on investment (ROI) or other profitability ratios.

Profit Center

A business unit or department within an organization that is responsible for generating its own revenue and profit.