phone co. reported the following art One MxQ (1) Net Incom Secure https/online.b
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phone co. reported the following art One MxQ (1) Net Incom Secure https/online.bryan.edu/mod attempt.phpattempt 149193age 2 Question 16 t yt anpwered Marked out os la Copy Co. opened a new business location on April 1. During April, Copy Co. sold $150,000 of copies for cash along with $280,000 of copies on account to customers. Payments collected from these customers amounted to $212,000 during April, with the balance to be collected during May How much revenue should Copy Co. report on its April income statement? Select one a. 150,000 b. 430,000 ?. 280,000 d.212,000 O Type here to searchExplanation / Answer
In April's Income statement whole amount of revenue will be recognised i.e.430000.
Revenues from primary activities are often referred to as operating revenues. The primary activities of a retailer are purchasing merchandise and selling the merchandise. The primary activities of a manufacturer are producing the products and selling them. For retailers, manufacturers, wholesalers, and distributors the revenues resulting from their primary activities are referred to as sales revenues or sales. The primary activities of a company that provides services involve acquiring expertise and selling that expertise to clients. For companies providing services, the revenues from their primary services are referred to as service revenues or fees earned. (Some people use the word income interchangeably with revenues.)
It's critical that you don't confuse revenues with receipts. Under the accrual basis of accounting, service revenues and sales revenues are shown at the top of the income statement in the period they are earned or delivered, not in the period when the cash is collected. Put simply, revenues occur when money is earned, receipts occur when cash is received.
For example, if a retailer gives customers 30 days to pay, revenues occur (and are reported) when the merchandise is sold to the buyer, not when the cash is received 30 days later. If merchandise is sold in December, the sale is reported on the December income statement. When the retailer receives the check in January for the December sale, the retailer has a January receipt—not January revenues.
Similarly, if a consulting company asks clients to pay within 30 days of receiving their service, revenues occur (and are reported) when the service is performed (earned), not 30 days later when the consulting company receives the cash from the client.
If an attorney requires a client to prepay $1,000 before beginning to research the client's case, the attorney has a receipt, but does not have revenues until some of the research is done.
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