Practice question · Multiple choice
A company receives 12,000 on October 1 for a one-year service contract. By December 31, how much revenue should be recognised?
Hints
- How many months of service have been delivered?
- October, November, December = 3 months.
Show the answer
A. 3,000, three months of a twelve-month contract
Why
Three months of twelve: . The remaining 9,000 sits as unearned revenue (a liability) until the service is delivered.
Practise Adjusting Entries
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More questions on Adjusting Entries
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