Accumulated depreciation
2007:95,000
2006:45,000
Cash collections Cash Expenses
A) $202,400 $119,900
B) $202,400 $58,100
C) $197,600 $119,900
I choose C however the ans is A
The answer from Qbank: cash collections = 200,000 + (156,000 - 132,000)
Since the receivables from 2006 to 2007 has an increase of 156000-132000 = 2400, i thought we should deduct from the sales since it is increase in assets which is consider as outflow of cash.
Why is it that the 2400 must be added to the sales for this case?
Thanks
Edited 1 time(s). Last edit at Monday, October 4, 2010 at 12:15PM by vitalstrike82.作者: dmar 时间: 2011-7-11 18:36
i forget to add the 1 more line:
it states: Calculate cash collections and cash expenses作者: draz 时间: 2011-7-11 18:36
The account is unearned revenue, not accounts receivable. You have an increase in a liability account (not an asset) and the offset is an increase in cash. Basically they paid for goods or services which won't be recieved until a future year.作者: suyash1989 时间: 2011-7-11 18:36
SpyAli Wrote:
-------------------------------------------------------
> I beg to differ with your last line Super 1.
> Unearned revenue is the cash that you have
> received in advance for the services which you are
> still due to offer. So that's why it will be
> treated as a liability account.
You're right of course, and I wasn't clear. " They" paid meaning the customers paid作者: waldziuchna 时间: 2011-7-11 18:36
oh thanks everyone for the advice. i mistaken unearned revenue as account receivables.
