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13 March, 18:19

A company with a December 31 fiscal year end sold and delivered $5,000 worth of inventory on December 15, 2016 with payments of $1,200 collected on December 28, 2016 and $3,800 collected January 25, 2017. Under the accrual method of accounting, what amount of revenue would be recognized in 2016?

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  1. 13 March, 20:47
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    Accrual accounting means revenue and expenses are recognized and recorded when they occur unlike cash basis which are revenues recognised recorded when there are cash payments.

    Given:

    Sold = $ 5,000

    Cash in 2016 = $ 1,200

    Cash in 2017 = $ 3,800

    Using the above definition of accrual accounting,

    Revenue = $ 5,000
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