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

Question

Quizplus · Accepted Answer

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

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