Uber's Struggle with Profitability

Background Uber has booked over 2 billion rides since its launch. In the recent year, Uber reported $6.5 billion in revenue. However, the company had a net loss of $2.8 billion.

Multiple Choice Questions 1. If Uber provided a ride to a customer who paid $22 in cash (through her debit card), what would the journal entry be to record the revenue received? a. Revenue                                           22                Accounts Receivable                          22 b. Revenue                                           22                Cash                                                     22 c. Accounts Payable                            22                Revenue                                              22 d. Cash                                                 22                Revenue                                              22

Multiple Choice Questions 2. If Uber paid a driver $3,400 cash for rides provided over the course of one month, how would this payment be recorded? a. Salaries Expense                               3,400                Accounts Payable                                 3,400 b. Salaries Expense                               3,400                Cash                                                        3,400 c. Accounts Payable                              3,400                Salaries Expense                                   3,400 d. Cash                                                    3,400                Salaries Expense                                   3,400

Discussion Questions 3. The following are accounts taken from Uber’s financial statements. (i) For each account, identify its normal balance. (ii) Discuss how Uber could increase the normal balance of the Booking Revenue account. a. Cash d. Accounts Receivable b. Booking Revenue e. Accrued Liabilities c. Gasoline Expense f. Accounts Payable 4. Unearned revenue is a liability account that is increased when a customer pays in advance for products or services.  Uber generates unearned revenue by selling gift cards to passengers.  By doing this, Uber collects revenue prior to providing their rideshare service.  In a recent month, Uber received $135,000 from gift card sales.  Discuss why Uber’s unearned revenue from gift card sales is a liability.