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Revenue and earnings

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My terracotta business (which adopted the accrual method), sold $100K worth of pots. I received cash up front of $20K, and accounts receivable is $80K. How much is my revenue?

If I said I made $50K from my terracotta business in the past 3 months. and you wanted to check whether I am telling you the truth, which Financial Stmt would you check? (Assume you are only able to look at the January Fin Stmts) Why?

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Solution Summary

The solution explains how to determine the amount of revenue and check the earnings from the business

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1. In accrual method revenue is recorded when earned (the goods are delivered among other things) and so if $100K worth of pots are sold (goods are delivered), the ...

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