Colbert Operates a Catering Service on the Accrual Method

question 113

Multiple Choice

Colbert operates a catering service on the accrual method. In November of year 1, Colbert received a payment of $9,000 for 18 months of catering services to be rendered from December 1 ^st of year 1 through May 31 ^stof year 3. When must Colbert recognize the income if his accounting methods are selected to minimize income recognition?

• A)$500 is recognized in year 1, $6,000 in year 2, and $2,500 in year 3.
• B)$500 is recognized in year 1 and $8,500 in year 2.
• C)$9,000 is recognized in year 3.
• D)$2,500 is recognized in year 1 and $6,500 in year 2.
• E)$9,000 is recognized in year 1.

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Definitions:

Small-Scale Producers

Individuals or businesses engaged in the production of goods on a limited scale, often characterized by handcrafted or artisanal methods.

Dominant Class

Refers to the social group holding the most power, wealth, or influence within a society at a given time.

Livestock

Domesticated animals raised in an agricultural setting to produce commodities such as meat, milk, and wool.

Peons

Historically, laborers or workers in Latin America who were indebted to their employers, often working for little or no pay to pay off a debt.