On December 15, 2018, a company receives an order from a customer for services to be performed on December 28, 2018. Due to a backlog of orders, the company does not perform the services until January 3, 2019. The customer pays for the services on January 16, 2019.
The revenue recognition principle requires the revenue to be recorded by the company on:

Question

Quizplus · Accepted Answer

The revenue recognition principle dictates that revenue should be recognized when the service is performed, which in this case is January 3, 2019, regardless of when payment is received or when the order was placed.

On December 15, 2018, a Company Receives an Order from a Customer