Consider the Following Three Scenarios

question 258

Multiple Choice

Consider the following three scenarios:
I. ABC Lawncare performed lawn maintenance services for Drake Inc.
On June 1^st, and received payment of $500 for those services.
II. On June 1^st, Melly Corp received payment for 100 pounds of raw material
To be delivered to Drake Inc. in 6 months.
III. Lodo, LLC collected cash on June 1^st for services rendered on May 1^st.
Given these scenarios, revenue cannot be recognized on June 1^st for:

• A) I, II
• B) I only
• C) II, III only
• D) III only

---

Definitions:

Budgeted Production

The quantity of goods or services that a company plans to produce during a specific period, as determined during budgeting.

Materials Inventory

The raw materials, work-in-process, and finished goods that a company holds at any given time for production.

Credit Sales

Sales made by a business where the payment is deferred to a later date, enabling customers to purchase goods or services on credit.

Cash Receipts

The collection of money, including coins, notes, electronic payments, etc., by a business from its customers or other transactions.