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During 2019, Zigma Company earned service revenue amounting to $760,000, of which $625,000 was collected in cash; the balance will be collected in January 2020. Also in 2019, there were collections of cash prior to the delivery of goods/services totaling $10,400. What amount should the 2019 income statement report for service revenue?

Respuesta :

jafransp

Answer:

$625,000

Explanation:

According to the revenue recognition principle, revenues can only be recognized whenever the service has been performed and not when the cash has been received. Therefore, Zigma Company should report $625,000 for service revenue in the 2019 income statement. $10,400 should not come as revenue because the company did not provide any services or sell any products.

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