Regal Real Estate,which Maintains Its Accounts on the Basis of a Fiscal

question 25

Multiple Choice

Regal Real Estate,which maintains its accounts on the basis of a fiscal year ending June 30,began the management of an office building on June 15 for an agreed annual fee of $4,800.The first payment is due on July 15.The adjusting entry required at June 30 is:

• A)A debit to Management Fees Receivable for $200 and a credit to a revenue account for $200.
• B)A $200 debit to Unearned Management Fees and a $200 credit to Management Fees Earned.
• C)A debit to Cash for $200 and a credit to Management Fees Earned.
• D)A debit to Cash for $400 offset by a credit to a revenue account for $200 and a liability for $200.

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Definitions:

Limited Resources

The finite availability of resources such as time, money, and materials, which necessitates choices about their allocation.

Scarcity

A fundamental economic problem of having seemingly unlimited human wants in a world of limited resources.

Resources Are Limited

A principle stating that the availability of physical, natural, and human resources is finite, necessitating choices and trade-offs.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, representing the benefits one could have received by taking a different decision.