Colbert Operates a Catering Service on the Accrual Method

question 44

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 1st of year 1 through May 31st 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:

Acorn Worms

Marine invertebrates in the phylum Hemichordata, known for their burrowing habits and acorn-shaped proboscis, playing a vital role in marine ecosystems.

Species Diversity

The variety of species within a region or ecosystem, encompassing species richness and the complexity of their interactions.

Asteroidea

A class within the phylum Echinodermata, commonly known as starfish or sea stars, characterized by their star-shaped body plan.

Holothuroidea

Holothuroidea, commonly known as sea cucumbers, are echinoderms with elongated bodies and leathery skin, representing a major group of the phylum Echinodermata.