Alex Is a Calendar-Year Sole Proprietor

question 4

Multiple Choice

Alex is a calendar-year sole proprietor.He began business on December 1,this year.He uses the accrual method of accounting.Alex had the following collections in December: • Collected $7,000 in December,from clients who paid cash for services to be performed next year.
• Collected $5,000 in December,for services performed during December; deposited in an operating account on December 31,this year.
• Collected $12,000 in December; on accounts receivable for services performed in December; deposited in operating account on January 2,next year.
What is the amount Alex must include in his income for December?

• A)$7,000
• B)$12,000
• C)$17,000
• D)$24,000

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Definitions:

Brass Industry

Refers to the sector of the economy dedicated to the production and sale of brass products and materials.

Demand Function

Describes the relationship between the quantity of a good consumers are willing to buy and the price of the good, holding other factors constant.

Bertrand Competition

A market model in which two or more firms compete by setting prices, with each firm considering the price set by competitors when determining its own price.

Cournot Equilibrium Price

A concept in economics where competing firms reach a state of balance in which each firm's output decision is optimal, given the output decisions of other firms, leading to a stable price level in oligopolistic markets.