Speak Corporation,a Calendar Year Accrual-Basis Taxpayer,sell Packages of Foreign Langauge

question 28

Multiple Choice

Speak Corporation,a calendar year accrual-basis taxpayer,sell packages of foreign langauge lessons to individuals planning to work overseas.In December 2016,it sold and received payment for $600,000 of 24-month lesson packages to be provided evenly through 2017 and 2018.Speak Corporation will recognize the $600,000 of income

• A)all in 2016.
• B)half in 2017 and half in 2018.
• C)all in 2017.
• D)all in 2018.

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Definitions:

Double-Entry Bookkeeping System

An accounting system where every entry to an account requires a corresponding and opposite entry to a different account, ensuring the accounting equation remains balanced.

Single-Entry System

An accounting method where each financial transaction is recorded only once, either as an expense or income, making it simpler but less comprehensive than double-entry systems.

Cash Flow

The total amount of money being transferred into and out of a business, affecting its liquidity, solvency, and overall financial health.

Debt Collection

The process of pursuing payments of debts owed by individuals or businesses.