Your company orders and receives supplies in January,pays for them in February,provides services to customers that use those supplies in March,and is paid by its customers for the services in April.Using the accrual basis of accounting:

Question

Quizplus · Accepted Answer

The expense recognition principle states that expenses should be recorded in the same period as the revenues they generate,not necessarily the period in which cash is paid for them.As such,an expense would be recorded in March when the supplies are used.According to the revenue recognition principle,revenues should be recognized when the performance obligation is satisfied.As such,revenue would be recorded in March when the services are performed.

Your Company Orders and Receives Supplies in January,pays for Them