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Dixon Company Collected Cash in Year 1 from a Customer

Question 80

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Dixon Company collected cash in Year 1 from a customer for services to be performed beginning January,Year 2.Indicate whether each of the following statements about this transaction is true or false.

Premises:
The revenue for the services provided will be recorded in Year 2.
This transaction is an asset exchange transaction.
Dixon's Year 1 statement of cash flows would be affected by this transaction.
The transaction increases Dixon's liabilities.
Dixon's Year 2 income statement would not be affected by this transaction.
Responses:
False
True

Correct Answer:

The revenue for the services provided will be recorded in Year 2.
This transaction is an asset exchange transaction.
Dixon's Year 1 statement of cash flows would be affected by this transaction.
The transaction increases Dixon's liabilities.
Dixon's Year 2 income statement would not be affected by this transaction.
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