Question

In early December, the Snowland Resort was paid $1,600 by a company to host its holiday party that month.

In addition to receiving the cash, the $1,600 is considered which of the following?

• Profit

• Expense

• Equity

• Revenue

Answer 1

we shall first understand the four terms

• Profit is Revenue-Expenses.. It is the amount left after deducting expenses from revenue.
• Expense- It is the cost of provideing service or manufacturing goods.Expenses are incurred by company like salaries, maintenance, electricity expense.
• Equity-Equity is the shareholder's /Owner's money invested in a business. Equity = Total assets-Total liabilities. It is the amount that would be paid to owners from assets available after paying off the debts.
• Revenue- It is the sales / Gross receipts received by company during the period. It is the net amount of service provided by the company to the customers.

The journal entry would be

	Account	Debit	Credit
	Cash	$1,600
	Service Revenue		$1,600

$1,600 received by snowland resort is Revenue for them as it is received against the service that would be provided by snowland resort to the company. It will be recorded as sales.

Thus, in addition to cash $1,600 is considered Revenue.

Answer D)

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