A dress shop makes a dress that sells for $200 and delivers it to the customer on June 30.The customer is sent a statement on July 7 and a cheque is received by the dress shop on July 11.When should the $200 be recognized as revenue?

Question

Quizplus · Accepted Answer

According to the revenue recognition principle in accounting, revenue should be recognized when it is earned, regardless of when payment is received. In this case, the dress was delivered (and thus, the revenue was earned) on June 30, so the revenue should be recognized on that date.

A Dress Shop Makes a Dress That Sells for $200