Question

In the Month of March, Chester received orders of 116 units at a price of $15.00 for their product Cute. Chester uses the accrual method of accounting and offers 30-day credit terms. Chester delivers 116 units in April. They received payment for 58 units in March and 58 units in April. In the March income statement, how much revenue is recognized on the March income statement from this order?

Answer 1

Zero

Step-by-step explanation:

Under the accrual basis, the revenue recognition criteria requires that revenue can only be recognized when the goods or service has been delivered and not necessarily when the order was received.

As such, given that Chester delivers 116 units in April and none in March, no revenue will be recorded in March, rather the amount received will be recorded as deferred or unearned revenue.