On September 1, Boz sold to Skaggs prepaid maintenance for $6,000 for six months. As of December 31, what is the amount that has been earned?

Question

Quizplus · Accepted Answer

Prepaid maintenance is a type of deferred revenue. Since Boz sold prepaid maintenance for six months, the amount that has been earned as of December 31 is 4/6 or 2/3 of $6,000, which is $4,000. Therefore, the correct answer is choice C.

On September 1, Boz Sold to Skaggs Prepaid Maintenance for $6,000