ABN Company sold goods, receiving $20,000 in cash and $25,000 on credit. How much revenue should it record under the accrual basis of accounting?

Name: ABN Company sold goods, receiving $20,000 in cash and $25,000 on credit. How much revenue should it record under the accrual basis of accounting?
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Question

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Under the accrual basis of accounting, revenue is recorded when it is earned, not when cash is received. Therefore, the company should record revenue for both the cash and credit sales, totaling $45,000.

ABN Company Sold Goods, Receiving $20,000 in Cash and $25,000