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An architect commenced business at the start of the financial year
An architect commenced business at the start of the financial year. During the year she invoiced clients a total of $250,000. At year end she was owed $20,000 by clients. On an accrual basis, sales revenue for year totalt + Which statement is correct? a. A provision is a type of current asse- b. The current portion of a loan is recorded as a current asset- c. A commitment is an amount contracted for and incurred at balance date d. A contingent liability is a possible but uncertain obligation at balance date + of an entity. Dividends are of earnings that have been made to a. reports, owners b. liabilities, business c. affiliations, resources d. distributions, owners
Expert Solution
Question 1
The Architect should record Revenus of $ 250,000 because he is following accrual basis of accounting and in accrual basis of accounting revenue is recorded as and when the services are provided and billed. Similarly in this case the services has been provided only the realisation of some part is pending.
Question 2
Option D is the Correct Answer.
A Contingent Liability is a possible but uncertain event at a Balance Sheet Date.
Contingent Liability are those which are dependent on future outcomes which is uncertain today but it may have implications in the future.
Question 3
Option D is the Correct Answer.
Distributions and Owners.
Dividends are those part of earnings which are distributed by a company to it's shareholders as return on their Investment.
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