Question 16
Davis Co., an interior design firm, billed a client $15,000 for work completed for the client during December 20X6. This $15,000 was not received until January 20X7. Also, Davis Co. collected $9,000 from another client in December 20X6 in advance of services to be performed in January 20X7. Based on these facts, on an accrual basis under generally accepted accounting principles, the amount of revenue recognized as earned
in December 20X6 should be
| a. |
$6,000. |
|
| b. |
$9,000. |
|
| c. |
$15,000. |
|
| d. |
$24,000. |
| Under accrual basis of accounting, revenue is recogized when earned irrespective of when payment is received. |
| Revenue recognized in December 20X6 will equal the amount billed in December 20X6. |
| Revenue recognized in December 20X6 = $15,000 |
| Option C $15,000 is correct |
Question 16 Davis Co., an interior design firm, billed a client $15,000 for work completed for...