Jim Operates His Business on the Accrual Method and This

question 17

Multiple Choice

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

• A) 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.
• B) Jim can defer the recognition of the income if he absolutely promises not to provide the services until next year.
• C) Jim must defer the recognition of the income until the income is earned.
• 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:

Scientific Societies

Scientific Societies are organizations or associations dedicated to the advancement of scientific research and knowledge, often providing a forum for the exchange of information and ideas among scientists.

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The path taken by an object in space that revolves around another object in an ellipse shape, typical of planets and comets in our solar system.

Kepler

A German mathematician and astronomer known for his laws of planetary motion, which provided one of the foundations for Isaac Newton's theory of universal gravitation.