A catering company supplies food for a large event for $20,000 on October 30.The customer is sent a statement on November 5 and a check is received on November 10.The catering company follows GAAP and applies the revenue recognition principle.When is the $20,000 considered to be earned?

Question

Quizplus · Accepted Answer

According to the revenue recognition principle, revenue should be recognized when the service or goods have been provided, regardless of when payment is received. In this case, the catering company provided the food on October 30, so the $20,000 is considered to be earned on that date.

A Catering Company Supplies Food for a Large Event for $20,000