During the Last Month of Its Fiscal Year, Echo Lake

question 140

Multiple Choice

During the last month of its fiscal year, Echo Lake Resort accepted numerous deposits from customers. By the end of the month many, but not all, of these guests had completed their stays. The entry to record this event is an example of an adjusting entry:

• A) To apportion a recorded cost.
• B) To apportion unearned revenue.
• C) To record unrecorded expenses.
• D) To record unearned revenue.

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Definitions:

General and Administrative

Expenses related to the day-to-day operations of a business that are not directly tied to production, including salaries of non-production staff, office supplies, and rent.

Direct Materials

Raw materials that are directly traceable to the production of a specific good or product.

Prime Costs

Refers to the direct costs of manufacturing a product, including direct materials and direct labor.

Conversion Costs

Expenses incurred when transforming raw materials into finished goods, typically including labor and overhead costs.