On December 15 of the current year,Conrad Accounting Services signed a $40,000 contract with a client to provide bookkeeping services to the client in the following year.Which accounting principle would require Conrad Accounting Services to record the bookkeeping revenue in the following year and not the year the cash was received?

Question

Quizplus · Accepted Answer

The revenue recognition principle states that revenue should be recognized when it is earned, regardless of when cash is received. In this case, Conrad Accounting Services has not yet provided the bookkeeping services, so the revenue has not yet been earned. Therefore, the revenue should be recorded in the following year when the services are provided, in accordance with the revenue recognition principle.

On December 15 of the Current Year,Conrad Accounting Services Signed