Question

A flower shop makes a large sale for $1,000 on November 30. The customer is sent a statement on December 5 and a check is received on December 10. The flower shop follows GAAP and applies the revenue recognition principle. When is the $1,000 considered to be recognized?

A) December 10
B) November 30
C) December 1
D) December 5

Answer 1

November 30

Step-by-step explanation:

The $1000 is recognized as a debit to Accounts Receivable and a credit to Sales Revenue on November 30. The journal entry would look like this:

Nov 30 Accounts Receivable 1,000

Sales Revenue 1,000