During 2016, Sigma Company earned service revenue amounting to $700,000, of which $630,000 was collected in cash; the balance will be collected in January, 2017. Also in 2016 there were collections of cash prior to the delivery of goods/services totaling $10,000. What amount should the 2016 income statement report for service revenue?
A)$630,000.
B)$700,000.
C)$70,000.
D)$570,000.

Question

Quizplus · Accepted Answer

The income statement should report the amount of revenue earned during the period, regardless of when the cash is collected. In this case, Sigma Company earned $700,000 in service revenue during 2016, so that is the amount that should be reported on the income statement.

During 2016, Sigma Company Earned Service Revenue Amounting to $700,000