A flower shop makes a large sale and provides flowers to a customer for $1,000 on November 30. The customer is sent a statement on December 5 and a check is received on December 10. The flower shop follows IFRS and applies the revenue recognition principle. When is the $1,000 considered to be earned?
A) December 5.
B) December 10.
C) November 30.
D) December 1.

Question

Quizplus · Accepted Answer

According to the revenue recognition principle, revenue should be recognized when goods or services are transferred to the customer and the amount can be reliably measured. In this case, the flower shop provided the flowers to the customer on November 30, so the $1,000 is considered to be earned on that date. The fact that the statement was sent on December 5 and the check was received on December 10 does not affect the timing of revenue recognition.

A Flower Shop Makes a Large Sale and Provides Flowers