During February,Blake Building Co.billed a customer $4,500 for services performed during February.During March,Blake collected the $4,500.Which of the following statements about this transaction is correct?
A)$4,500 of revenue should be recorded in February.
B)$2,250 of revenue should be recorded in February and $2,250 in March.
C)$4,500 of revenue should be recorded in March.
D)No revenue should be recorded for these events because they relate only to the balance sheet.

Question

Quizplus · Accepted Answer

The revenue recognition principle is the requirement under accrual basis accounting to record revenues when the performance obligations are satisfied,not necessarily when cash is received for them.The company should record the $4,500 of revenue in February when the services are performed.