Jim Operates His Business on the Accrual Method and This

question 39

Multiple Choice

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

• A) Jim can defer the recognition of the income if he absolutely promises not to provide the services until next year.
• B) Jim must defer the recognition of the income until the income is earned.
• C) 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.
• 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.The deferral method can be elected for advance payments of unearned service income if the income is also unearned for financial reporting.

---

Definitions:

Low Self-Esteem

Refers to a person's belief that they are not worthy or do not measure up to others' or their own standards.

Mood Swings

Rapid and extreme changes in one's emotional state.

Self-Serving Bias

The tendency to attribute positive outcomes to one's own character but attribute negative outcomes to external factors.

Negotiating

The process of discussing and arriving at a mutual agreement between parties with different interests.