Question

Nonrefundable upfront fees _________.
a. should not be recorded as revenue if they are for future delivery of products and services.
b. such as activation fees for cable should be allocated over the term of the contract.
c. such as a one-time initiation fee in a health club should be recognized immediately.
d. should be recognized immediately upon receipt of payment.

Answer 1

Answer:

a. should not be recorded as revenue if they are for future delivery of products and services.

Explanation:

Nonrefundable upfront fees are fees paid in advance before a transaction is done. Nonrefundable upfront fees are not earned until the service or goods  for which they were paid are delivered, the accrual concept of accounting states that revenue is only recognized when they are earned. This type of income should be recorded in the income statement once the transaction for which the fee was charged is consummated.