A pool cleaning service signs a contract with a new customer on May 1.The pool is vacuumed and "shocked" for the customer on June 1,and the bill for the services is paid on July 1.Under the accrual basis,the business should recognize revenue on

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Under the accrual basis of accounting, revenue is recognized when it is earned, regardless of when the payment is received. In this case, the pool cleaning service earned the revenue when they vacuumed and "shocked" the pool on June 1, so that is when the revenue should be recognized. May 1 is the date the contract was signed, but no services had been provided yet, so it is not appropriate to recognize revenue on that date. July 1 is when the payment was received, but the revenue had already been earned in June. December 31 is not relevant to this specific transaction.

A Pool Cleaning Service Signs a Contract with a New