Question

Saanich Ltd. operates a new fitness centre in a large city. As a grand opening promotion, Saanich offered a three-year membership for $600. To take advantage of the promotion, members had to pay at the time they signed up. Two hundred people took advantage of the offer. The fitness centre opened on January 1, 2017 and all memberships begin on that day.
a. Under cash accounting, how much revenue should Saanich report for the year ended December 31, 2017? Explain.
b. Under accrual accounting, how much revenue should Saanich report for the year ended December 31, 2017? Explain.
c. What is the impact of each method of accounting on the balance sheet on December 31, 2017?
d. Which method of accounting provides a more relevant/useful measure of revenue?



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  • CreatedFebruary 26, 2015
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