Question

In: Accounting

X Company is a service company and prepares monthly financial statements.


X Company is a service company and prepares monthly financial statements. In April, it billed customers $405,000 for services it provided; in May, it billed customers $369,000 for services it provided.

In May, the company received $281,000 from its April customers and $273,000 from its May customers.

Which of the following amounts will appear on X Company's May Income Statement and Statement of Cash Flows?

a. both statements, $369,000
b. Income Statement, $369,000; Statement of Cash Flows, $554,000
c. Income Statement, $554,000; Statement of Cash Flows, $369,000
d. both statements, $273,000
e. Income Statement, $774,000; Statement of Cash Flows, $554,000
f.Income Statement, $554,000; Statement of Cash Flows, $774,000

answer:

Solutions

Expert Solution

option - B

income is recognized When its billed So in may $ 369000 Appears on income Statement ( accrual basis )

in Cash Flow Statement

it appears ( 281000 + 273000 ) $ 554000 since it records only Cash receipts And Cash payments when received or paid ( Cash Basis )

ekkarill92 answered 1 year ago
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