Chpt 6

Question 1

Define income

Answer 1

Income refers to the amount earned through business activities.

It comprises revenue earned from selling goods and providing services and other income earned from other businesses activities.

Question 2

Difference between revenue and other income.

Answer 2

Revenue is the amount of money earned from main business activities such as selling goods and providing services, while other income is the amount of money earned from other businesses activities.

Question 3

Theory when accounting for revenue

Answer 3

Revenue recognition theory.

Question 4

Accounting theory applied when calculating / adjusting for income

Answer 4

According to the accrual basis of accounting theory, business activities that have occured, regardless of whether cash is paid or received, should be recorded in the relevant accounting period. Thus, income must be recorded in the period when it is earned regardless of whether cash is received or not.

Question 5

Define income received in advance

Answer 5

Income received in advance refers to income that is received, but not yet earned as the service has not been provided yet.

Question 6

Define income receivable

Answer 6

Income receivable refers to income that is earned but not yet received , services have been provided but the amount has not been received