Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 15 - No. 4)
A company performs services for a customer in December, but the customer pays in January. When should the company recognize the revenue under accrual accounting?
When the cash is received in January.
When the services were performed in December.
When the invoice is sent.
At the end of the fiscal year.
Explanation
Under accrual accounting, revenue is recognized when it is earned, regardless of cash receipt.
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