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This Liability Account Is Credited When Cash Is Received for Goods

question 6

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This liability account is credited when cash is received for goods and/or services in advance of being earned


Definitions:

Predetermined Manufacturing Overhead

The estimated cost of manufacturing overhead assigned to each unit of production, based on a predetermined rate.

Machine-hours

A measure of the amount of time a machine is used for production, often used in allocating manufacturing overhead based on usage.

Markup

The amount added to the cost price of goods, to cover overhead and profit, determining the selling price.

Overhead Applied

The allocation of overhead costs to specific jobs or activities based on a predetermined rate.

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