On December 15 of the current year,Conrad Accounting Services signed a $40,000 contract with a client to provide bookkeeping services to the client in the following year.Which accounting principle would require Conrad Accounting Services to record the bookkeeping revenue in the following year and not the year the cash was received?

Question

Quizplus · Accepted Answer

The revenue recognition principle requires revenue to be recognized when it is earned, which means when the service is provided, regardless of when the payment is received. Therefore, Conrad Accounting Services should record the bookkeeping revenue in the following year when the service is provided, in accordance with this principle.

On December 15 of the Current Year,Conrad Accounting Services Signed