Question

If Janine uses the full inclusion method, she would recognize the entire prepayment of $6,000 as income in year 0.

1) True
2) False

Answer 1

The statement is false. Janine would not recognize the entire prepayment of $6,000 as income in year 0.

Step-by-step explanation:

The statement is false. If Janine uses the full inclusion method, she would not recognize the entire prepayment of $6,000 as income in year 0.

Under the full inclusion method, income is recognized when it is earned or received, whichever comes first. For prepaid income, it is recognized as income over the period in which the services or goods are provided.

In this case, Janine would recognize the prepayment of $6,000 as income over the period in which she provides the goods or services related to the prepayment.