Pemco Enterprises sells annual memberships to its shooting lodge. The memberships cost $210 each. On January 1, Pemco sold 2,000 memberships and received cash. Refer to Pemco Enterprises. How much revenue should Pemco recognize on January 1?
A) $0
B) $420,000
C) $210,000
D) $35,000

Question

Quizplus · Accepted Answer

Revenue should be recognized when it is earned, not necessarily when cash is received. Since the memberships are for a year, the revenue is earned over the year, not on January 1.

Pemco Enterprises Sells Annual Memberships to Its Shooting Lodge