Question

"in year 1, costello company performed $14,000 of services for a customer who paid immediately. it also incurred $6,000 of wage expenses but did not pay employees until year 2. if costello uses the accrual-basis of accounting, then costello will report"

Answer 1

Answer: revenue of $14,000 and expense of $6,000 in Year 1.

Explanation:

In accrual accounting, it should be noted that for this accounting method, the revenue or expenses that are made by the individual or company will be recorded as at the time that the transaction took place and not when the payment for the transaction was gotten.

Since Costello company performed $14,000 of services and also incurred $6,000 of wage expenses, then Costello will report revenue of $14,000 and expense of $6,000 in Year 1.