Practice question · Multiple choice
A company delivers consulting services in December but the client pays in January. Under accrual accounting, when is revenue recognized?
Hints
- Accrual means recording when the event happens.
- The service happened in December.
Show the answer
A. December, when the service was delivered
Why
Accrual records revenue when earned, the service was delivered in December, so December gets the revenue. January only records the cash collection (Dr Cash, Cr Receivable).
Practise Recording Transactions
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