If a company is using the accrual basis accounting method, when should it record its earned revenue?
A)When cash is received, even though services may be rendered at a later date
B)When services are rendered, even though cash may be received at a later date
C)When services are completely rendered and cash is received
D)When cash is received, 30 days after the completion of the services

Question

Quizplus · Accepted Answer

If a company is using the accrual basis accounting method, it should record its earned revenue when services are rendered, even though cash may be received at a later date. This means that revenue is recognized when it is earned, regardless of whether or not the cash has been received. This is in contrast to the cash basis accounting method, where revenue is only recognized when cash is received.

If a Company Is Using the Accrual Basis Accounting Method