The Fireside Country Inn is a very popular destination for tourists.The Inn requires guests to make reservations at least two months in advance of their stay.A 20 percent down payment is required at the time the reservation is made.When should this inn recognize room rental revenue?
A)On the date the reservation is received.
B)On the date the money for the reservation is received.
C)On the date the guests stay in the inn.
D)On the date the guests pay the remaining 80 percent due.
E)Once all cash has been received.

Question

Quizplus · Accepted Answer

Room rental revenue should be recognized on the date the guests stay in the inn, as this is when the services are provided to the guests. The down payment received at the time of reservation should be recorded as a liability until the services are actually provided. The remaining 80 percent due can be recorded as revenue on the date it is received.

The Fireside Country Inn Is a Very Popular Destination for Tourists.The