On February 1^st,H&B Bank originated a loan for $50,000 at an interest rate of 7.2%.On March 15^th,an interest payment of $300 was received.Which of the following best describes when interest revenue should be recognized?

Question

Quizplus · Accepted Answer

The revenue recognition principle states that revenue should be recognized when it is earned, which is when the company has provided goods or services to the customer. In the case of a loan, interest revenue is earned over time as the borrower pays interest on the outstanding balance. Therefore, option D is the best choice as interest revenue should be recognized over time rather than at a single point in time.

On February 1st,H&B Bank Originated a Loan for $50,000 at an Interest

On February 1^st,H&B Bank Originated a Loan for $50,000 at an Interest