Intermediate Case

1. When the electricity usage is constant from month to month, then the revenue that was not reported in December would be reported in January, and overall revenues for this year would be materially correct.

2. On balance sheet it may be reflected as $10000 account payable and $10000 account receivable, or by recording the revenue that occurred and involved the service by the time.

3. If the cruise happens in 2007, its profit of $ 20000 will be recorded as revenue in 2006.

4. It will be considered as an opportunity cost issue. The revenue might be higher if the nursery owner decides to keep trees growing for one more year, and he will not be reporting any revenue in 2006.

5. The professional service firms record its revenue as the service is performed because they value their jobs in progress at the billing rates. Therefore, it does make a difference whether the revenue is recognized when the time is applied or when the client is billed makes difference in owner's equity, and inventory that is valued at billing rates rather than cost will be reflected in retained earnings.

6. I think that the coupon has nothing to do with the sales of coffee. It is there to promote the sale of tea. The 60 cent reimbursements made in 2006 and the 60 cents reimbursements made in 2007 are an expense of selling tea in 2007.

7. The bank would record the sale of $500 traveler's checks for $505 as follows:

Cash 505

American Express payable 500

Commission Revenue 5

After the remittance of $500 cash to American express from the bank, the following entry will be recorded:

Cash 500

Traveler's checks 500

8. The merchandise