On December 15,2019,a company receives an order from a customer for services to be performed on December 28,2019.Due to a backlog of orders,the company does not perform the services until January 3,2020.The customer pays for the services on January 6,2020.The revenue principle requires the revenue to be recorded by the company on:

Question

Quizplus · Accepted Answer

The revenue principle states that revenue is recognized when goods or services are transferred to the customer and the amount can be reasonably measured. In this case, the services were not performed until January 3, 2020, so revenue cannot be recognized until that date. Therefore, the company should record the revenue on January 3, 2020, when the services were performed, and not on the date of the order, the scheduled service date, or the date of payment.

On December 15,2019,a Company Receives an Order from a Customer