What activity normally reduces the liability

Assignment Help Accounting Basics
Reference no: EM131805441

Problem: Deferred Revenue

When American Airlines sells tickets for future flights, it debits Cash and credits account entitled Air Traffic Liability (as opposed to crediting Passenger Revenue Earned). This account, reported recently at nearly $4.5 billion, is among the largest liabilities appearing in the company's balance sheet.

A. Explain why this liability of often referred to as a deferred revenue account.

B. What activity normally reduces the liability? Can you think of any other transaction that would also reduce this account?

C. Assume that, in a recent flight, passengers of the airline used tickets that they had purchased in advance for $87,500. Record the entry American Airlines would make upon completion of this flight.

Reference no: EM131805441

Questions Cloud

Knowledge management business intelligence : Knowledge Management Business intelligence, knowledge management, and expert systems are powerful tools that allow corporations
Deanna have to sell next year just to pay : DeAnna have to sell next year just to pay for rising entrance feecosts
What is the standard error of a statistic : In what way does the standard error indicate the quality of the information provided by an estimate? c. What typically happens to the standard error.
Find the expected loan payment : You know that one of your customers has been having trouble with the recession and may not be able to make the loan payment that is due next week.
What activity normally reduces the liability : What activity normally reduces the liability? Can you think of any other transaction that would also reduce this account?
What type of lease is this to rodeo corporation : Rodeo Corporation is a manufacturer of truck trailers. What type of lease is this to Rodeo Corporation? Use criteria to justify your answer
Knowledge retention of departing employees : Select an organization of your choice and examine the extent to which it has established any processes or procedures to ensure knowledge retention
What is the finite-population correction factor : In what way are your results more limited if you use the finite-population correction factor than if you do not?
How would you decide among the remaining projects : Find the expected payoff for each of these four projects. In terms of just the expected payoff, rank these projects in order from best to worst.

Reviews

Write a Review

Accounting Basics Questions & Answers

  Bagodonuts company bought a used delivery truck on january

bagodonuts company bought a used delivery truck on january 1 2010 for 19200. the van was expected to remain in service

  Assume the same facts as stated in d8- 4 except

Assume the same facts as stated in D8- 4 except that the Pension Trust Fund is operated by a five member board of directors. Before the end of the current fiscal year three of the board members terms expire.

  Analyze the effect of transactions on assets and liabilities

Analyze the effect of transactions - Analyze the effect of transactions on assets, liabilities, and stockholders' equity

  Discuss variance analysis in a hospital

Two basic types of tests are performed in the lab, smears and blood tests

  Jay mills started a business by issuing a face value

What is the principal balance on January 1, 2014?

  Wynn sheet metal reported an operating loss

Wynn Sheet Metal reported an operating loss of $162,000 for financial reporting and tax purposes

  Management of a cellular phone company learns that a new

management of a cellular phone company learns that a new technological advance will occur within the next year that

  The inventory at june 1 and costs charged to work in

the inventory at june 1 and costs charged to work in process -department 60 during june are as follows3600 units 70

  The intent and ability to hold the investments

How would your answers to requirements 1-5 differ if management had the intent and ability to hold the investments until maturity?

  Prepare a government-wide statement of activities

prepare a government-wide statement of activities and a statement of net assets. Restricted net asets for debt service increase $ 87 (000s omitted) for period

  Calculate amount of cash and marketable securities

Using Excel show all formulas for following: Firm has current assets of 100 million and current liabilities of 50 million and goes belly-up.

  However royal company has determined that 8 of the fixed

royal company manufactures 23000 units of part r-3 each year for use on its production line. at this level of activity

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd