| Situation | Which
principle? | Period
to record: Revenue / Expense |
c. Guilford, Inc.
paid $500 each for two airline
tickets in June. One
ticket was used in July. | matching | $500
in July—a ticket was used in July and
is not traced to any particular
revenue. |
d. In
2008, Orangeburg Enterprises received
payment of
$2,750 on account from
customers who purchased merchandise
in 2007. | revenue
recognition | $2,750
of revenue in 2007 because that is
when it was sold. Collection from
the
customer in 2008 is not revenue. |
e. In February,
Trident Consulting Services used up
$200 of office
supplies specifically for a report
for a client.
The report was finished and delivered
to the client
in March, who paid in April. | matching | $200
expense in March. This expense can
be traced to a particular revenue
in March
when the report was delivered. |
f. On December
30, 2008, a frequent and reliable
customer of Greenville
Company calls and says it
will purchase $50,000 of
merchandise in the first
week of January 2009. | revenue
recognition | No
revenue is recognized yet. This is because there has only been a promise-
and no sale has been made. |
g. Midlands
Corporation pays a $1,000 account
payable on July
3 for June utility services. | matching | $1,000
of utility expense in June. This
expense cannot be identified with any
particular revenue. |
h. York
Company receives a $1,500 advance
payment from a
client in April for accounting
services, which are
provided in May. | revenue
recognition | $1,500
of revenue is recognized in May,
when the services are provided. |
i. In
June, Williamsburg Company prepays rent for
July,
August, and September in the amount of $9,000. | matching | $3,000
per month for July, August, and
September—the periods that benefited. |
