Revenue and Other income

Which is the correct definition of revenue recognition theory?

• Revenue is recognised when money is received.

• Revenue is recognised when goods are sold and services provided.

• Revenue is recognised with business records it.

A business sells goods on credit. Which journal entry is correct?

• DR Trade receivables CR Cash at bank

• DR Trade receivables CR Sales revenue

• DR Sales revenue CR Trade receivables

• DR Cash at bank CR Sales revenue

Service fee received in advance refers to fees _______________.

• received after services are provided

• received before services are provided

• received at the time services are provided

For the year ended 30 June 2019, Gooffy Music received cheque totalling to $25 000, out of which $2 500 was for streaming services to be provided in July 2019.

Which of the following statements are true?

• $2 500 should be adjusted as trade receivables.

• $2 500 should be adjusted as service fee received in advance.

• $2 500 should not be recognised as revenue earned for the year ended 30 June 2019.

• The service fee revenue earned for 30 June 2019 is $22 500.

Mickey Tuition has a financial year end of 30 April.

When does the accountant need to adjust for income received in advance or income receivables?

• 1 May

• 30 April

• 31 December

State the double entry to adjust for service fee revenue received in advance.

• DR Service fee revenue CR Trade receivables

• DR Service fee revenue CR Income summary

• DR Service fee revenue CR Service fee revenue received in advance

Which of the following statements are correct about income received in advance?

• It is a current liability

• It needs to be adjusted at the end of the accounting year

• It must be deducted from the income

• It is an income

For the year ended 30 April 2020, the business received $48 000 in cheque for rental income.

The rental income earned for the year was $50 000.

Choose the correct statement.

• The business has a rental income received in advance of $2 000

• The business has a rental income receivable of $2 000

• The business has a rental income of $2 000

For the year ended 31 July 2020, Ali Baba received a total of $15 000 in cheque for commission income.

The accountant realised that the business has yet to receive $1 000 of commission income for products sold in June 2020.

Calculate the commission income earned for the year ended 31 July 2020.

Show your workings.

For the year ended 31 December 2019, Mufasa received a total of $10 500 in cheque for rental income.

The accountant realised that the business received $1 500 of rental income for the month of January 2020.

Calculate the rental income earned for the year ended 31 December 2019.

Show all your workings.