During 20X2, New Company earned service revenues amounting to $200,000, of which $120,000 were collected in cash; the balance will be collected in January 20X3. The 20X2 statement of earnings of the company should report which of the following amounts for service revenues?

Question

Quizplus · Accepted Answer

Under the accrual basis of accounting, revenues are recognized when earned, not necessarily when cash is received. Therefore, the company should report $200,000 in service revenues for 20X2, which includes both the cash collected and the amount to be collected later.

During 20X2, New Company Earned Service Revenues Amounting to $200,000