[Anonymous]

Becker MCQ #1:

Progressive Township Community College received a $900,000 multi-year research grant available for use on a pro rata basis over the next three years subject to other enrollment based eligibility requirements. At the end of Year 1 of the grant, the college had achieved enrollment levels that satisfied grant eligibility requirements equal to $500,000. As a result of this transaction, the community college would recognize:

The part I care about is deferred inflow and unearned revenue. Here, Becker explains that since only $300,000 can be recognized as revenue, then the remaining $200,000 that satisfies the grant eligibility requirement but not time requirement will be deferred inflow. The remaining $400,000, which satisfies neither eligibility nor time requirement, will be designated as the unearned revenue. This makes sense. Now take a look at the next Becker MCQ.

Becker MCQ #2:

In which situation(s) should property taxes due to a governmental unit be recorded as deferred inflows of resources?

I.Property taxes receivable are recognized in advance of the year for which they are levied.

II.Property taxes receivable are collected in advance of the year in which they are levied.

a. II only.

b. Neither I nor II.

c. I only.

d. Both I and II.

The correct answer is “d.” Here is the part that I am very confused. Technically for “II.”, if we receive cash in advance before the taxes are levied, then that could be count as an unearned revenue right? So what exactly is the difference between unearned revenue and deferred inflow of resources? These two questions are really tripping up my understanding of deferred inflows and unearned revenues 🙁

Thank you!