Your company orders and receives goods in January,pays for them in February,sells them in March and is paid by customers in April.Using the accrual basis of accounting:

Question

Quizplus · Accepted Answer

With the accrual basis of accounting, expenses and revenues are recorded when they are incurred, not when they are paid or received. In this scenario, the goods were received in January, so the corresponding expense should be recorded in January as well. The company paid for the goods in February, but this does not affect when the expense is recorded. The goods were then sold and revenue was earned in March, and the corresponding revenue should be recorded in March as well. Finally, the customers paid in April, which is when the cash is received, but this does not affect when the revenue is recorded. Therefore, expenses and revenues are both recorded in March.

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