Question

A newly created weekly free newspaper has approached your bank seeking a loan. Although the newspaper is free, it gets significant revenue from advertising. In the first 2 months of operations, it reported profits of $10,000. It has receivables of $70,000 on $200,000 of advertising revenue.
Some of the revenue reported for these 2 months included special promotional pricing that gave advertisers 4 months of ads for the price of 2 months. All this promotional revenue was included in the income statement for 2 months. Comment on the reported profit.



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  • CreatedFebruary 20, 2015
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