Zane Corporation sells $1,000 worth of goods on July 25 on credit. The customer sends the company a check on August 15. The customer receives the goods on September 1. Assuming the company uses accrual accounting, the sale will be recorded in _____.

Question

Quizplus · Accepted Answer

According to the revenue recognition principle of accrual accounting, revenue should be recorded when earned, regardless of when cash is actually received or goods are delivered. In this case, the sale was made on credit in July, so it should be recorded as revenue in July. The fact that the customer sent a check in August and received the goods in September is irrelevant to the timing of revenue recognition.

Zane Corporation Sells $1,000 Worth of Goods on July 25