On March 1, a Company Collects Revenue in Advance for the Next

question 12

Multiple Choice

On March 1, a company collects revenue in advance for the next twelve months and credits a liability account. The adjusting entry at year end on the work sheet would

• A) increase a liability account
• B) decrease an asset account
• C) decrease a revenue account
• D) decrease a liability account

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Definitions:

Direct Labor-hours

The total hours worked by employees that can be directly associated with the production of goods or services.

Manufacturing Overhead

All indirect costs related to the production process, including salaries, maintenance, and utilities, not directly attributable to specific units produced.

Unit Product Cost

The total cost to produce one unit of a product, calculated by dividing the total production costs by the number of units produced.

Direct Labor-hours

The total hours of labor directly involved in manufacturing a product or providing a service, typically used as a basis for allocating overhead costs.