Gonzales Company collected $18,000 on September 1, 2013 from a customer for services to be provided over a one-year period beginning on that date. How much revenue would Gonzales Company report related to this contract on its income statement for the year ended December 31, 2013? How much would it report as cash flows from operating activities for 2013?

Question

Quizplus · Accepted Answer

Gonzales will recognize revenue earned for the 4 months between September 1 and December 31 ($18,000 x 4/12 = $6,000). However, the company will recognize the entire $18,000 received as a cash inflow for operating activities in 2013.

Gonzales Company Collected $18,000 on September 1, 2013 from a Customer