Question

On September 9, Clearmore Services receives a request for services from a customer. The service is scheduled for September 15. On September 15, the service is provided, and the customer pays one week later on September 22. Using accrual-basis accounting, on which date should Clearmore Services record service revenue?

Multiple Choice

September 9 (date of service request).

September 15 (date of service).

September 22 (date of cash receipt).

Evenly over the three dates.

Answer 1

In accrual-basis accounting, Clearmore Services should record the service revenue on September 15, the date when the service was actually provided, as revenue is recognized when earned.

Step-by-step explanation:

Using accrual-basis accounting, revenue is recognized when it is earned, regardless of when the payment is actually received. For Clearmore Services, the service was scheduled and provided on September 15. Therefore, according to the principle of revenue recognition under accrual accounting, Clearmore Services should record the service revenue on September 15, the date when the service was actually provided to the customer.

Answer 2

Clearmore Services should record service revenue on September 15, the date the service was provided.

Step-by-step explanation:

Clearmore Services should record service revenue on September 15, the date the service was provided. This is because accrual-basis accounting recognizes revenue when it is earned, which is when the service is provided, regardless of when the payment is received. Therefore, the revenue should be recorded on the date of service.