Question
Stannous Company earns $2,000 of revenue on account in Year 1. Cash collections of receivables amount to $1,800 in Year 1 with the remainder being
Stannous Company earns $2,000 of revenue on account in Year 1. Cash collections of receivables amount to $1,800 in Year 1 with the remainder being collected in Year 2. Which of the following shows how these events will affect the company’s financial statements at the time revenue is recognized in Year 1?
Balance sheet | Income Statement | Statement of Cash Flows | |||||||||
Assets | = | Liabilities | + | Equity | Rev. | - | Exp. | = | Net Inc. | ||
A. | + | = | NA | + | + | + | - | NA | = | + | + OA |
B. | NA | = | + | + | + | + | - | NA | = | + | + OA |
C. | + | = | NA | + | + | + | - | NA | = | + | NA |
D. | − | = | NA | + | − | − | - | NA | = | − | + OA |
a. Option A
b Option B
c Option C
d Option D
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Fundamental financial accounting concepts
Authors: Thomas P. Edmonds, Frances M. Mcnair, Philip R. Olds, Edward
8th edition
978-007802536, 9780077648831, 0078025362, 77648838, 978-0078025365
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