WFO Corporation has gross receipts according to the following schedule: Year 1 $22.50 million Year 2 $23.55 million Year 3 $25.25 million Year 4 $25.50 million Year 5 $26.50 million Year 6 $28.50 million If WFO began business as a cash-method corporation in Year 1, in which year would it have first been required to use the accrual method?

WFO Corporation has gross receipts according to the following schedule: Year 1 $22.50 million Year 2 $23.55 million Year 3 $25.25 million Year 4 $25.50 million Year 5 $26.50 million Year 6 $28.50 million If WFO began business as a cash-method corporation in Year 1, in which year would it have first been required to use the accrual method?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

WFO Corporation has gross receipts according to the following schedule:

Year 1 $22.50 million

Year 2 $23.55 million

Year 3 $25.25 million

Year 4 $25.50 million

Year 5 $26.50 million

Year 6 $28.50 million

If WFO began business as a cash-method corporation in Year 1, in which year would it have first been required to use the accrual method?

Multiple Choice

___ Year 3.

___ Year 4.

___ Year 5.

___ Year 6.

___ None of the choices are correct.

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