On December 31, 2019, a Company Signed a One-Year Contract

question 162

Multiple Choice

On December 31, 2019, a company signed a one-year contract to provide services to a particular customer for $12,000. The customer will pay for the services during January 2020. Using the accrual basis of accounting, when should the company recognize revenue?

• A)In January 2020, when the cash is received.
• B)On December 31, 2020, after all services have been provided.
• C)Equally throughout 2020, as the revenue is earned.
• D)On December 31, 2019, when the contract is signed.

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Definitions:

Barron v. Baltimore

A landmark Supreme Court case in 1833 which established the principle that the Bill of Rights applied only to the federal government, not to the states.

Supreme Court

The highest federal court in the United States, with ultimate appellate jurisdiction over all U.S. federal courts and over state court cases involving issues of federal law.

Bill of Rights

The first ten amendments to the United States Constitution, guaranteeing essential rights and freedoms to American citizens.

Prior Restraint

is a legal doctrine that prohibits governmental entities from preventing the publication or dissemination of media content before it is published, typically viewed as a violation of free speech rights under the First Amendment.