Team Shirts purchased T-shirts in July.The T-shirts were sold to customers in August.Team Shirts received the final cash payments in September.According to the revenue-recognition principle,when should revenue be recorded?

Question

Quizplus · Accepted Answer

According to the revenue-recognition principle, revenue should be recorded when it is earned, which is when the goods or services are delivered or performed. In this case, the T-shirts were sold to customers in August, so revenue should be recorded in August. The final cash payments received in September are simply the collection of the revenue earned in August.

Team Shirts Purchased T-Shirts in July