(Solved by Humans)-Problem 5-62A REVENUE RECOGNITION Katie Vote owns a small business that rents computers to...

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Problem  5-62A  REVENUE RECOGNITION Katie Vote owns a small business that rents computers to students at the local university for the nine month school year. Katie’s typical rental contract requires the student to pay the year’s rent of $900 ($100 per month) in advance. When Katie prepares financial state- ments at the end of December, her accountant requires that Katie spread the $900 over the nine months that a computer is rented. Therefore, Katie can recognize only $400 revenue (four months) from each computer rental contract in the year the cash is collected and must defer recognition of the remaining $500 (five months) to next year. Katie argues that get- ting students to agree to rent the computer is the most difficult part of the activity so she ought to be able to recognize all $900 as revenue when the cash is received from a student.   Required: Explain why you believe that generally accepted accounting principles require the use of accrual accounting rather than cash-basis accounting for transactions like the one described here.