and takes about two weeks to complete.
Customers are required to pay for a job within
30 days after
ABC Company guarantees its work for five years – if the building walls
within five years, ABC Company will clean them again at no charge.
ABC Company is
recognizing revenue using one of the following methods:
Record revenue when ABC Company signs the contract to do the job
Record revenue when ABC Company begins the work
Record revenue immediately after the completion of the job
Record revenue 30 days after the completion of the job when the cash is
Wait until the five-year guarantee period is over before recording any revenue
Using the realization principal, which option above would you
that ABC Company follow?
Explain your answer.
For each of the accounts listed below, indicate whether it is an asset, a liability, an equity,
or an expense account.
Additionally, indicate whether the account would have a normal
a debit or a credit.
Cost of Goods Sold