On December 15,2016,a company receives an order from a customer for services to be performed on December 28,2016.Due to a backlog of orders,the company does not perform the services until January 3,2017.The customer pays for the services on January 6,2017.When should revenue be recorded by the company?

Question

Quizplus · Accepted Answer

Revenue should be recorded when the services are actually performed, which was on January 3, 2017. Even though the order was received on December 15, 2016, the services were not performed until a later date, so it would not be appropriate to record revenue in December. The fact that the customer paid on January 6, 2017 is not relevant to when revenue should be recorded.

On December 15,2016,a Company Receives an Order from a Customer