Homework Answers
Service revenue earned in the first year = $10,000
Wages expense incurred in the first year = $3,000
Cash of $10,000 was received from customer in the second year.
According to accrual basis of accounting, revenues and expenses are recorded in the year of occurrence.
Hence, the company will report revenue of $10,000 and expense of $3,000 in the first year.
Second option is correct.
Kindly comment if you need further assistance. Thanks‼!
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