During May,Sea the World Cruises,Inc.collected $1,000 cash from a customer for services to be provided during June.Which of the following statements about this transaction is correct?

Question

Quizplus · Accepted Answer

Revenue should be recognized when services are provided or goods are delivered. In this case, the services will be provided in June, so the revenue should be recorded in June when the services are actually provided. Therefore, option C is correct. Option A is incorrect because the cash was received in May but that does not mean revenue should be recognized in May. Option B is incorrect because revenue should be recognized in the period when services are provided, not based on the timing of cash receipt or cash payment. Option D is incorrect because revenue recognition is related to the income statement, not the balance sheet.