During 2019,Sigma Company earned service revenue amounting to $700,000,of which $630,000 was collected in cash;the balance will be collected in January,2020.Also in 2019,there were collections of cash prior to the delivery of goods/services totaling $10,000.What amount should the 2019 income statement report for service revenue?
A)$630,000.
B)$700,000.
C)$70,000.
D)$570,000.

Question

Quizplus · Accepted Answer

The correct amount to report for service revenue on the 2019 income statement is $700,000. This is because under the accrual basis of accounting, revenues are recognized when earned, not necessarily when cash is received. Sigma Company earned $700,000 in service revenue during 2019, so this is the amount that should be reported, regardless of the cash collections timing.

During 2019,Sigma Company Earned Service Revenue Amounting to $700,000,of Which