Stanfield Equipment sells new tractors and pays each salesperson a commission of $1,000 for each tractor sold. During the month of August, a salesperson, Jason, sold 3 new tractors. Stanfield pays Jason on the 10th day of the month following the sale. Jason operates on the cash basis; the tractor dealer operates on the accrual basis. Which of the following statements is true?
a. Jason will recognize commission revenue earned in the amount of $3,000 in August.
b. Stanfield will recognize commission expense in the amount of $3,000 in August.
c. Jason will recognize commission expense in the amount of $3,000 in September.
d. Jason will recognize revenue in the same month that the tractor dealer recognizes expense.
b
You might also like to view...
Internal users of accounting information include:
a. creditors. b. suppliers. c. employees. d. taxing agencies.
An improperly recorded mortgage or deed of trust is effective against subsequent purchasers of the subject real property.
Answer the following statement true (T) or false (F)
The costs associated with the preparation of a proposal are
a. charged to the customer. b. absorbed by the contractor as a cost of doing business. c. included as a direct expense in the proposal. d. charged to other projects as direct expenses.
The basic principle involved with expense recognition is:
A. All transactions are recorded at the exchange price. B. The business will continue to operate indefinitely unless there is evidence to the contrary. C. All costs that are used to generate revenue are recorded in the period the revenue is recognized. D. The business is separate from its owners.