On June 30, a printing shop provides $1,000 of services to a customer to custom print restaurant menus. The customer is sent a b

Question

2 years ago

8

On June 30, a printing shop provides $1,000 of services to a customer to custom print restaurant menus. The customer is sent a b

ill on July 5 for the amount due. A check in the amount of $1,000 is received from the customer on July 25. The printing shop follows GAAP and applies the revenue recognition principle. When is the $1,000 sale recognized?

Business

1 answer:

Margaret [11] · Answer 1 · 2023-04-17T16:27:16+03:00

Answer:

June 30

Explanation:

According to the revenue recognition principle, the sale is made when it is earned, not when it is received by the customer. That means it follows the accrual basis of accounting, not the cash basis of accounting.

In the given situation, On June 30 the printing shop provides service to a customer for $1,000, On July 5 it sent a bill and on July 25, the amount is received by the customer.

So, The $1,000 would be recognized on June 30 when the sale is made by the printing shop