Question

On November 15, Meier Company received $3,000 cash from a customer for services that were performed on November 1. According to the Revenue Recognition Principle, on which date should the revenue be recorded?

November 1.

November 15.

One-half on each date.

Neither.

Answer 1

Revenue should be recorded when it is earned, which is November 1 in this scenario, not when the payment is received on November 15.

Step-by-step explanation:

The question deals with the concept of revenue recognition, which is a fundamental principle in accounting. According to the Revenue Recognition Principle, revenue should be recorded when it is earned, regardless of when the payment is received. In this scenario, the services were performed by Meier Company on November 1, so the revenue should be recorded on that date, not on the date the cash was received, November 15.