Jim Operates His Business on the Accrual Method, and This

question 110

Multiple Choice

Jim operates his business on the accrual method, and this year, he received $4,000 for services that he intends to provide to his clients next year. Under what circumstances can Jim defer the recognition of the $4,000 of income until next year?

• A)Jim can defer the recognition of the income if he absolutely promises not to provide the services until next year.
• B)Jim must defer the recognition of the income until the income is earned.
• C)Jim can defer the recognition of the income if he has requested that the client not pay for the services until the services are provided.
• D)Jim can elect to defer the recognition of the income if the income is not recognized for financial accounting purposes.
• E)Jim can never defer the recognition of the prepayments of income.

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Definitions:

Safety Regulations

Rules and guidelines developed to protect the health and well-being of individuals, often enforced by governing bodies.

Environmental Regulations

Are legal provisions and standards aimed at protecting the environment by controlling pollution and ensuring sustainable use of natural resources.

Inventory Carrying Cost

The total expenses associated with holding and storing unsold goods, including warehousing, insurance, depreciation, and opportunity costs.

Annual Requirement

The total quantity or amount of a particular resource or input that is needed by an organization or project over the course of a year.