Consider a cheque received in payment for revenues that have not yet been earned. Assuming that company uses the cash-basis of accounting, how would that payment be recorded?
A)it would be recorded as unearned revenue until it is actually earned.
B)the entire amount would be recognized as revenue in the current period.
C)it would be recorded as a prepaid expense.
D)none of the above.

Question

Quizplus · Accepted Answer

Under the cash-basis of accounting, revenues are recognized when cash is received, regardless of when they are earned. Therefore, the entire amount would be recognized as revenue in the current period.

Consider a Cheque Received in Payment for Revenues That Have