Sydney & Caesar Law Firm uses the cash basis to keep their accounting records.During 2014,they collected $400,000 from clients.On December 31,2013 they had accounts receivable of $60,000.On December 31,2014 they had accounts receivable of $80,000 and unearned revenue of $15,000.Using the accrual basis,how much is Sydney & Caesar Law Firm's service revenue for 2014?

Question

Quizplus · Accepted Answer

To calculate the service revenue for 2014 using the accrual basis, we need to add the revenue earned during the year, regardless of whether or not it was paid, and subtract any revenue received in advance or yet to be received.

Revenue earned during the year = $400,000 (collected from clients) + $80,000 (accounts receivable on December 31, 2014) - $60,000 (accounts receivable on December 31, 2013) = $420,000

Subtracting the unearned revenue of $15,000, we get:

Service revenue for 2014 = $420,000 - $15,000 = $405,000

Therefore, the correct choice is C.

Sydney & Caesar Law Firm Uses the Cash Basis to Keep