Revenue Recognition and AccrualAccounting U.S. Political Consultants has been in

Question

Revenue Recognition and AccrualAccounting

U.S. Political Consultants has been in existence for many years.During the month of November, the following events occurred:

1. The owners contributed an additional $6,500to the business to finance an expansion of operations.

2. Consulting services totaling $11,000 wereperformed on credit during November and billed to customers.

3. A loan in the amount of $25,000 was obtainedfrom a wealthy campaign contributor.

4. Expenses in the amount of $6,000 wereincurred during the month. One-third had been paid for by monthend.

5. Cash of $18,500 was collected from customersfor whom services had been performed during September andOctober.

6. Services totaling $4,500 were performed forcustomers who had paid in the previous month for the services.

Explanation / Answer

1 Revenueshould not be recorded Theamount is additional capital contributed by owners. 2 Revenue should berecorded The amountcollected is in relation to the services providedby the consultants . 3 Revenue should notbe recorded The amount is aloan obtained from a contributor 4 Revenue should notbe recorded The amount incurredshould be recorded as expenditure 5 Revenue should notbe recorded The Revenue shouldbe recorded in the months in which serviceswere performed 6 Revenue should berecorded The Revenue shouldbr transferred from unearned revenue.

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