The Grass is Greener Corporation provides $6,000 worth of lawn care on account during the month.Experience suggests that about 2% of net credit sales will not be paid.According to the revenue recognition principle and the matching principle,the company should:

Question

Quizplus · Accepted Answer

According to the revenue recognition principle, the company should record the revenue when the service is provided, which in this case is during the month. However, since experience suggests that some customers may not pay, the company should also estimate and record bad debt expense in the same period to match the expense with the revenue recognized. Therefore, option A is the best choice. Options B and C are not correct because they would not follow the revenue recognition and matching principles.

The Grass Is Greener Corporation Provides $6,000 Worth of Lawn