Question

Under accrual accounting, when does the doctor recognize revenue if a surgery is performed in March and the cash is received from the patient in July?

1) In July
2) In March
3) In either March or July
4) At a time that cannot be determined from the facts

Answer 1

Under accrual accounting, revenue is recognized when it is earned, rather than when cash is received. In this case, the revenue from the surgery should be recognized in March, even if the cash is received in July.

Step-by-step explanation:

Under accrual accounting, revenue is recognized when it is earned, rather than when cash is received.

In this case, since the surgery was performed in March, the revenue should be recognized in March, even if the cash is received in July.

This is because under accrual accounting, revenue is recognized when the service is provided or the product is delivered, regardless of when the cash is received.