1. A customer paid $60,000 to Foley Marketing on December 30, 2015, to perform services from January 1, 2016 through December 31, 2019. If Foley fails to record the revenue recognized, ________ would be understated by ________ each year.

A.) net income, $15,000

B.) net income, $12,000

C.) liabilities, $15,000

D.) assets, $12,000

2. Kingman Consulting uses the cash basis of accounting and a fiscal year ending December 31. Beginning on September 1, 2016, Kingman performs services for Renfro International at a rate of $5,000 per month. On February 12, 2017, Renfro pays Kingman $25,000 in full for all services rendered from September 1, 2016 to January 31, 2017. Kingman understated revenues by ________ on its year-end financial statement.

A.) $20,000

B.) $5,000

C.) $25,000

D.) $15,000