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?

Answer 1

November 30

Explanation:

The principle of revenue recognition occurs when the income is recognized or collected, either cash is obtained or not and it also meets the accounting accrual basis. Realizable here means that the customer gets the product but the payment was made later

In the given case, since the flower shop makes a large sale for $1,000 on November 30 so on the same date the revenue is recognized