Question

Camp Consulting Services started business on January 1, 2016. Camp performed services for customers totaling $100,000 of which 40% remain uncollected at the end of December. Under the accrual basis, what amounts would appear on Camp Consulting's financial statements for 2016?

Income Statement ... Statement of Cash Flows

a. ​$60,000 ... $60,000
​b. ​$60,000 ... $100,000
​c. ​$100,000 ... $60,000
​d. ​$100,000 ... $100,000

Answer 1

Under the accrual basis of accounting, Camp Consulting's Income Statement for 2016 would show revenue of $100,000, and the Statement of Cash Flows would reflect cash receipts of $60,000.

Step-by-step explanation:

The correct answer to the question of what amounts would appear on Camp Consulting's financial statements for 2016 under the accrual basis is option c. $100,000 ... $60,000. This is because under the accrual basis of accounting, income is recognized when earned, not when collected. Therefore, the Income Statement would show the full $100,000 earned from services. However, the Statement of Cash Flows would reflect the actual cash received, which is $60,000 after considering that 40% remains uncollected.