Jim Operates His Business on the Accrual Method, and This

question 110

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.

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Definitions:

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A non-invasive method to monitor the oxygen saturation level of the blood using a device usually clipped to a finger.

Arterial Blood Gases

Tests that measure the levels of oxygen and carbon dioxide in the arterial blood, indicating the efficiency of the lungs in gas exchange.

Inhaled Steroids

Medications delivered directly to the lungs through inhalation to reduce inflammation and treat respiratory conditions like asthma.

Osteoporosis

A condition characterized by weakened bones that become fragile and more likely to fracture.