During 2021, Ocean Consulting had the following transactions with its clients (customers): On February 1, 2021, the company receieved cash of $10,000 from clients in payment of their account balances as of December 31, 2020. On November 1, 2021, the company receieved $4,000 cash as payments in advance for services to be performed in 2022. The company receieved a total of $26,000 in cash for services that were performed during 2021. The company sent bills totaling $8,000 to clients for services performed during 2021; this amount was unpaid as December 31, 2021 Which of the following statements about the activities for Ocean Consulting for 2021, is correct? A. if accounts receivable at December 31, 2020 totaled $50,000, the amount of accounts receivable to be reported on the balance sheet at December 31, 2021 will be $48,000 B. the $4,000 receieved from clients for services to be performed next year will be reported as revenue on the 2021 income statement C. the $8,000 owed by clients for services performed this year will be reported as accounts payable on the balance sheet at December 31, 2021 D. the $10,000 receieved this year from clients in payment of their accounts will be reported as service revenue on the 2021 income statement

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter16: Accounting Periods And Methods

Section: Chapter Questions

Problem 33P

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During 2021, Ocean Consulting had the following transactions with its clients (customers):

On February 1, 2021, the company receieved cash of $10,000 from clients in payment of their account balances as of December 31, 2020.
On November 1, 2021, the company receieved $4,000 cash as payments in advance for services to be performed in 2022.
The company receieved a total of $26,000 in cash for services that were performed during 2021.
The company sent bills totaling $8,000 to clients for services performed during 2021; this amount was unpaid as December 31, 2021

Which of the following statements about the activities for Ocean Consulting for 2021, is correct?

A. if accounts receivable at December 31, 2020 totaled $50,000, the amount of accounts receivable to be reported on the balance sheet at December 31, 2021 will be $48,000

B. the $4,000 receieved from clients for services to be performed next year will be reported as revenue on the 2021 income statement

C. the $8,000 owed by clients for services performed this year will be reported as accounts payable on the balance sheet at December 31, 2021

D. the $10,000 receieved this year from clients in payment of their accounts will be reported as service revenue on the 2021 income statement

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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