An Adjusting Entry Involving Recognition of Accrued Revenue Is Necessary

question 110

Multiple Choice

An adjusting entry involving recognition of accrued revenue is necessary at the end of March in which of the following situations?

• A)Midwood Consultants received payment in February for consulting services rendered in March.
• B)Midwood Consultants began working for a client on March 15;bills will be sent monthly beginning April 15.
• C)Midwood Consultants made payment in January for office rent for the first three months of the year.
• D)On March 31,a major customer paid his bill for a consulting job completed in February.

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Definitions:

No-Par Value Stock

Stock issued without a specified face value but which may have a stated value assigned by the company.

Stated Value

The value assigned to no-par-value stock by the board of directors of a company, which can then be used as the basis for accounting and legal purposes.

Dividends in Arrears

Unpaid dividends on cumulative preferred stock, which must be paid out before any dividends can be issued on common shares.

Cumulative Preferred Stockholders

Investors holding a type of preferred stock that accumulates dividends in arrears should the dividends not be declared in any given period.