CFA CFA Level 1 CFA Level 1 Question of the Week – Financial Reporting and Analysis

CFA Level 1 Question of the Week – Financial Reporting and Analysis

  • This topic has 2 replies, 2 voices, and was last updated Aug-19 by kalalah.
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  • Matt_AnalystPrep
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    If at the end of the financial
    reporting period, a company receives cash for books which are to be delivered
    in the following period, the most appropriate accounting entry would be to
    record the transaction as:

    • A. accrued revenue.
    • B. deferred revenue.
    • C. prepaid expenses.
    Matt_AnalystPrep
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    The correct answer is B.

    The company will
    record the cash received as unearned revenue. Unearned revenue or deferred
    revenue arises when a company receives cash prior to earning revenues. The
    company will earn revenues when the books are delivered in the following year.

    kalalah
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    OMG my brain – I read ‘accrued revenue’ as ‘unaccrued revenue’.

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