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.

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Definitions:

October 1957

The month marked by the launch of Sputnik 1 by the Soviet Union, beginning the Space Age and igniting the U.S.-Soviet space race.

Korea

A region in East Asia, divided into two distinct countries: North Korea and South Korea, with distinct governments and political systems.

Great Britain

An island in the North Atlantic Ocean off the northwest coast of continental Europe, comprising England, Scotland, and Wales.

Japan

An island country in East Asia, known for its rich history, cultural heritage, and significant economic and technological advancements.