ACCA · Question 03 · The Use of Double-Entry and Accounting Systems
Section A
HydroGrid PLC, a public utility company, receives a $24,000 payment on 1 October 20X5 from a large industrial customer for an annual maintenance contract covering the period 1 October 20X5 to 30 September 20X6. HydroGrid's financial year ends on 31 December 20X5. What is the correct double-entry to record the adjustment needed on 31 December 20X5, assuming the full $24,000 was initially credited to Revenue?
Answer options:
Debit Revenue $6,000; Credit Deferred Income (Liability) $6,000
Debit Deferred Income (Liability) $18,000; Credit Revenue $18,000
Debit Revenue $18,000; Credit Deferred Income (Liability) $18,000
Debit Cash $24,000; Credit Revenue $24,000
65 questions · hints · full answers · grading
Expert