If a Company Records Cash Received for Services to Be

question 88

Multiple Choice

If a company records cash received for services to be provided in the future with a debit to Cash and a credit to Service Revenue,how will this error affect net income for the current period?

• A)Net income will be too low.
• B)Net income will be correct.
• C)Net income will be too high.

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Definitions:

MRP

Material Requirements Planning, a system for managing manufacturing processes by ensuring that materials and products are available for production and delivery at the right time.

Computer-based Production Planning

The use of computer systems and software to plan, coordinate, and optimize the production process in manufacturing.

Inventory System

A mechanism for tracking and managing an organization's goods throughout their lifecycle, from procurement to sale.

Materials Requirement Planning

A production planning, scheduling, and inventory control system used to manage manufacturing processes, ensuring materials are available for production and products are available for delivery.