The Maroon & Orange Gym, Inc

question 75

Multiple Choice

The Maroon & Orange Gym, Inc., uses the accrual method of accounting. The corporation sells memberships that entitle the member to use the facilities at any time. A one-year membership costs $480 ($480/12 = $40 per month) ; a two-year membership costs $720 ($720/24 = $30 per month) . Cash payment is required at the beginning of the membership period. On July 1, 2017, the company sold a one-year membership and a two-year membership. The company should report as gross income from the two contracts:

• A)$1,200 in 2017.
• B)$960 in 2017.
• C)$180 in 2019.
• D)$780 in 2018
• E)None of these.

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Definitions:

Sarbanes-Oxley Act

A U.S. federal law established to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to securities laws, and for other purposes.

Securities Fraud

Deceptive practices in the stock and commodities markets, including misleading investors or manipulating stock prices.

Corporate Fraud

Illegal activities undertaken by individuals or companies for financial gain, often through deceptive practices.

Accounting Oversight Board

An organization responsible for supervising and regulating accounting practices to ensure accuracy and fairness in financial reporting.