Please solve question 2&3 Question 2 The revenue recognition principle for a cor
ID: 2510777 • Letter: P
Question
Please solve question 2&3 Question 2 The revenue recognition principle for a corporation requires 1 Revenue is recognized when an order is received 2 Revenue is recognized when a service is performed 3 Revenue is recognized when cash is received 4 Can be any of the above; the company can choose 5 None of the above; depends on the type of corporation Question 3 Collection of a $1,000 accounts receivable 1 Increases an asset $1,000; decreases an asset $1,000 2 Increases an asset $1,000; decreases a liability $1,000 3 Decreases a liability $1,000; increases owner's equity $1,000 4 Decreases an asset $1,000; decreases a liability $1,000 5. Increases revenue $1,000; decreases asset $1,000
Explanation / Answer
Q2. Answer is 2. Revenue is recognized when the services is performed.
Q3. Answer is 1. Increase in Assets $1000; decrease in assets $1000
Explanation: The Journal entry for cash collection is :
Cash Dr. $1000
Accounts receivable $1000
Hence, cash increases and accounts receivable decreases.