Financial Accounting
5th Edition
ISBN: 9781259914898
Author: SPICELAND
Publisher: MCG
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Question
Chapter 3, Problem 1SSQ
To determine
Identify the date in which Company JP record the service revenue under revenue recognition principle.
Expert Solution & Answer
Answer to Problem 1SSQ
Option (b)
May 7 (date of service)
Explanation of Solution
Revenue recognition principle:
Revenue recognition principle states that every business organization should recognize the revenue when it is earned, no matter, cash related to that obligation is received or not.
Option (a): According to the revenue recognition principle, the revenue is recognized when it is earned. Thus, Company JP will not record the service revenue on May 5. Hence, Option (a) is incorrect answer.
Option (b): According to the revenue recognition principle, the revenue is recognized when it is earned. In this the service is provided on May 7. Thus, Company JP will record the service revenue on May 7. Hence, Option (b) is correct answer.
Option (c): According to the revenue recognition principle, the revenue is recognized when it is earned irrespective of the cash receipts. Thus, Company JP will not record the service revenue on May 10. Hence, Option (c) is incorrect answer.
Option (d): According to the revenue recognition principle, the revenue is recognized when it is earned. Thus, the company will record the service revenue only on May 7. Hence, Option (d) is incorrect answer.
As per the above explanation, Option (a), (c), and (d) are incorrect answer. Thus, Option (b) is correct answer.
Conclusion
Therefore, Option (b) May 7 (date of service) is correct answer.
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Chapter 3 Solutions
Financial Accounting
Ch. 3 - Prob. 1SSQCh. 3 - 2. On January 17, Papa’s Pizza signs a contract...Ch. 3 - 3. Refer to the information in Self-Study Question...Ch. 3 - 4. Refer to the information in Self-Study...Ch. 3 - 5. Which of the following is not a characteristic...Ch. 3 - d. Are recorded at the end of the accounting...Ch. 3 - 7. A company owes employee salaries of $5,000 on...Ch. 3 - Prob. 8SSQCh. 3 - 9. An adjusted trial balance
Lists all accounts...Ch. 3 - Prob. 10SSQ
Ch. 3 - Prob. 11SSQCh. 3 - Prob. 12SSQCh. 3 - Prob. 13SSQCh. 3 - Prob. 14SSQCh. 3 - Prob. 15SSQCh. 3 - After completing each requirement, check your...Ch. 3 - Applying Excel #3-2
A company reports the...Ch. 3 - 1. Discuss the major principle that describes...Ch. 3 - Prob. 2RQCh. 3 - Prob. 3RQCh. 3 - Prob. 4RQCh. 3 - LO3–2
Rip Side of Question 7
5. Executive Lawn...Ch. 3 - Prob. 6RQCh. 3 - Prob. 7RQCh. 3 - Prob. 8RQCh. 3 - Prob. 9RQCh. 3 - Prob. 10RQCh. 3 - Prob. 11RQCh. 3 - Prob. 12RQCh. 3 - Prob. 13RQCh. 3 - Prob. 14RQCh. 3 - Prob. 15RQCh. 3 - Prob. 16RQCh. 3 - LO3–3
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