Fang's Tune-Up Shop uses the accrual basis of accounting.Fang services a car on May 31.The customer picks up the vehicle on June 1 and mails payment to Fang on June 5.Fang receives the cheque in the mail on June 6.When would Fang recognize the revenue as being earned?
A)June 6
B)June 5
C)June 1
D)May 31

Question

Quizplus · Accepted Answer

Under the accrual basis of accounting, revenue is recognized when it is earned, regardless of when payment is received. Fang would recognize the revenue on May 31, when the service was completed.

Fang's Tune-Up Shop Uses the Accrual Basis of Accounting