If a company is using the accrual basis accounting method, when should it record its earned revenue?

a. when cash is received, even though services may be rendered at a later date

b. when services are rendered, even though cash may be received at a later date

c. when services are completely rendered and cash is received

d. when cash is received, 30 days after the completion of the services

Question

Business

Nibbles

29 December, 00:54

If a company is using the accrual basis accounting method, when should it record its earned revenue?

a. when cash is received, even though services may be rendered at a later date

b. when services are rendered, even though cash may be received at a later date

c. when services are completely rendered and cash is received

d. when cash is received, 30 days after the completion of the services

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Answers (1)

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Cornelius Quinn · Answer 1

Answer: b

Under the accrual basis of accounting, expenses are matched with the revenues related to it and/or are reported when the expense occurs, and not just when the cash is paid. The company should record its earned revenue when services are rendered. Payment may come at a later date.