Question

Accrued Revenue By the end of the year, a CPA firm has provided a client with 30 hours of service to prepare a tax return. The client agrees to pay for hours performed monthly on the fifteenth of the following month. The CPA firm bills clients $35 per hour. Calculate the accrued revenue the CPA firm should show in the year-end financial statements.

Answer 1

The accrued revenue the CPA firm should show in the year-end financial statements is $12,600.

Step-by-step explanation:

Accrued revenue refers to revenue that has been earned but not yet received. In this case, the CPA firm has provided 30 hours of service to prepare a tax return but has not yet been paid for it. The client agrees to pay for the hours performed monthly on the fifteenth of the following month.

Since the firm bills clients $35 per hour, the accrued revenue can be calculated by multiplying the number of hours by the billing rate and considering the number of months that have passed.

So, in this case, the firm has provided 30 hours of service. Let's assume it is the end of the year and no payment has been received yet. The accrued revenue for the 30 hours of service can be calculated as follows:

Accrued Revenue = Number of hours x Billing rate x Number of months

Accrued Revenue = 30 hours x $35/hour x 12 months = $12,600