A customer paid $60,000 to Foley Marketing on December 30, 2020, to perform services from January 1, 2021 through December 31, 2024.If Foley fails to record the revenue that should be recognized, ________ would be understated by ________ each year.
A)net income, $15,000
B)net income, $12,000
C)liabilities, $15,000
D)assets, $12,000

Question

Quizplus · Accepted Answer

The total payment of $60,000 is for services over four years, so $15,000 should be recognized as revenue each year. If Foley fails to record this, net income would be understated by $15,000 annually.

A Customer Paid $60,000 to Foley Marketing on December 30