During its first year of business,Mega,Inc.earned revenues of $400,000,of which it collected only $310,000 in cash.Which of the following statements is CORRECT?
A)The income statement will show Cash collected from customers of $310,000.
B)The balance sheet will show Accounts receivable of $310,000.
C)The income statement will show Revenues of $310,000.
D)The income statement will show Revenues of $400,000.

Question

Quizplus · Accepted Answer

The income statement shows revenues earned during the year, regardless of whether they have been collected in cash or not. Therefore, the income statement will show revenues of $400,000. However, the balance sheet will show accounts receivable of $90,000 ($400,000 - $310,000) reflecting the amount of revenue that has not yet been collected in cash.

During Its First Year of Business,Mega,Inc