AC113 Unit 4 Discussion

This unit focuses on the basic accrual accounting concepts and how to summarize transactions using accrual accounting. This unit also emphasizes the end of period adjustment process including deferrals and accruals, as well as the preparation of a classified balance sheet.

Unit 4 Discussion

· Discussion Overview

Topic 1: Abe Technologies provides maintenance service for computers and office equipment for companies throughout the Northeast. The sales manager is elated because she closed a $300,000, 3-year maintenance contract on December 29, 2016, two days before the company's year-end. “Now we will hit this year's net income target for sure,” she crowed. The customer is required to pay $100,000 on December 29 (the day the deal was closed). Two more payments of $100,000 each are also required on December 29, 2017 and 2018. Discuss the effect that this event will have on the company's financial statements.