In this period, a company recorded sales revenue of $50,000 from sales of goods to customers who agreed to pay later. In the next period, the company received payment from customers of $45,000. Choose the TRUE statement.
A) Revenue for this period is $45,000.
B) Accounts receivable at the end of next period is $5,000.
C) Accounts payable at the end of this period is $5,000.
D) Cash for next period will increase by $50,000.

Question

Quizplus · Accepted Answer

Accounts receivable represents the amount that customers owe the company, so at the end of this period, the accounts receivable balance would be $50,000. When customers pay in the next period, accounts receivable would decrease by $45,000, leaving a balance of $5,000 at the end of the next period. Revenue was already recorded in this period, so it's not affected by the payment receipt in the next period. Accounts payable is not mentioned in the scenario, so option C is incorrect. Cash for next period would increase by $45,000, not $50,000 since that's the amount received from customers. Option D is incorrect.

In This Period, a Company Recorded Sales Revenue of $50,000