Question
upstudy study bank question image url

Which Month should our Business recognize \& record Revenue into our accounting records? Our Business Agrees to provide Services to a Customer in January. The Work is performed for the Customer in March. The Cash is Collected in June. January March and June June

Ask by Barrett Hobbs. in the United States
Mar 12,2025

Upstudy AI Solution

Tutor-Verified Answer

Answer

Revenue should be recognized and recorded in March when the services are performed.

Solution

Sign in to Unlock Answers for Free!

A Learning Platform Trusted by Millions of Real Students and Teachers.

star-icon Unlock

Answered by UpStudy AI and reviewed by a Professional Tutor

Bonus Knowledge

In accounting, revenue recognition relies on the principle of realizing income when it is earned, not necessarily when payment is received. In your situation, since the services were performed in March, that's when you should recognize the revenue, regardless of when the cash is collected in June! A common mistake businesses make is assuming they can record revenue when cash is received. This can lead to misleading financial statements. Always match the recognition of revenue to the delivery of the services or goods rather than the cash flow to maintain accurate accounting records and compliance with accounting standards.

Related Questions

Latest Economics Questions

Try Premium now!
Try Premium and ask Thoth AI unlimited math questions now!
Maybe later Go Premium
Study can be a real struggle
Why not UpStudy it?
Select your plan below
Premium

You can enjoy

Start now
  • Step-by-step explanations
  • 24/7 expert live tutors
  • Unlimited number of questions
  • No interruptions
  • Full access to Answer and Solution
  • Full Access to PDF Chat, UpStudy Chat, Browsing Chat
Basic

Totally free but limited

  • Limited Solution
Welcome to UpStudy!
Please sign in to continue the Thoth AI Chat journey
Continue with Email
Or continue with
By clicking “Sign in”, you agree to our Terms of Use & Privacy Policy