Anderson Accounting Services LLC provides accounting and tax preparation and consulting services. Sometimes customers only wish to have financial statements and/or tax returns prepared. Sometimes customers bundle accounting and tax preparation with consulting services (to be provided over a period of time). Sometimes customers only wish to have consulting services provided over a period of time. Because Anderson is a service firm there is no cost of goods sold associated with their services.
Customer is Civic Corporation 1 Tax consulting begins on November 1st and runs through the next April 11/1/X7 Date of contract 11/1/X7 Length of consulting services 6 months months Tax return preparation occurs over the period February through April of 20X8 Length of tax prepartion 3 months Price of tax preparation to be allocated over the return preparation period $ 2,000 stand alone price Price of consulting services to be allocated over consulting period $ 5,000 stand alone price Customers are charged a lesser amount as follows for both tax and consulting $ 6,000 Anderson Accounting Services LLC's current year end 12/31/X7 Customers pay at the contract date for BOTH the consulting and tax preparation services.
What are the performance obligations in the contract?
A. Tax preparation services
B. Tax preparation services and tax consulting services
C. Unable to determine
D.Tax consulting services
QUESTION 3
Determine the transaction price that should be allocated to the consulting services.
A. $4,286
B. $1,714
C. $1,429
D. $4,571
QUESTION 4
Calculate the total revenue that should be recognized in the current accounting period.
A. $4,571
B. $1,714
C. $1,429
D. $4,286
QUESTION 5
What is the total amount in the deferred revenue account(s) at the end of the current accounting period?
A. $1,714
B. $4,571
C. $4,286
D. $1,429
QUESTION 6
What is the total amount of revenue that should be recognized in the NEXT accounting period period?
A. $1,714
B. $4,286
C. $1,429
D. $4,571
QUESTION 7
The following journal entry has what impact on the income statement?
Debit Cash XXX
Credit Deferred Revenue XXX
A. No impact
B. Decrease
C. Increase
QUESTION 8
The following journal entry has what impact on the income statement?
Debit Cash XXX
Credit Accounts Receivable XXX
A. No impact
B. Increase
C. Decrease
QUESTION 9
Revenue is defined as:
An inflow or other enhancements of assets of an entity or settlement of its liabilities (or a combination of both) during a period from delivering or producing goods, rendering services, or other activities that constitute the entityâs ongoing major or central operations.
Revenue is recognized from the settlement of which of the following liabilities:
A. Discount on Bonds Payable
B. Deferred Revenue
C. Salaries Payable
D. Accrued Interest
QUESTION 10
A customer must have "control" over the good or service in order for a performance obligation to be considered as having been satisfied for purposes of revenue recognition.
A. TRUE
B. FALSE
Anderson Accounting Services LLC provides accounting and tax preparation and consulting services. Sometimes customers only wish to have financial statements and/or tax returns prepared. Sometimes customers bundle accounting and tax preparation with consulting services (to be provided over a period of time). Sometimes customers only wish to have consulting services provided over a period of time. Because Anderson is a service firm there is no cost of goods sold associated with their services. | ||||||||
Customer is Civic Corporation | 1 | |||||
Tax consulting begins on November 1st and runs through the next April | 11/1/X7 | |||||
Date of contract | 11/1/X7 | |||||
Length of consulting services | 6 months | months | ||||
Tax return preparation occurs over the period February through April of | 20X8 | |||||
Length of tax prepartion | 3 months | |||||
Price of tax preparation to be allocated over the return preparation period | $ 2,000 | stand alone price | ||||
Price of consulting services to be allocated over consulting period | $ 5,000 | stand alone price | ||||
Customers are charged a lesser amount as follows for both tax and consulting | $ 6,000 | |||||
Anderson Accounting Services LLC's current year end | 12/31/X7 | |||||
Customers pay at the contract date for BOTH the consulting and tax preparation services. |
What are the performance obligations in the contract?
A. | Tax preparation services | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
B. | Tax preparation services and tax consulting services | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
C. | Unable to determine | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
D.Tax consulting services QUESTION 3 Determine the transaction price that should be allocated to the consulting services.
QUESTION 4 Calculate the total revenue that should be recognized in the current accounting period.
QUESTION 5 What is the total amount in the deferred revenue account(s) at the end of the current accounting period?
QUESTION 6 What is the total amount of revenue that should be recognized in the NEXT accounting period period?
QUESTION 7 The following journal entry has what impact on the income statement? Debit Cash XXX Credit Deferred Revenue XXX
QUESTION 8 The following journal entry has what impact on the income statement? Debit Cash XXX Credit Accounts Receivable XXX
QUESTION 9
QUESTION 10
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