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30 October, 12:51

Flyer Co. billed a client for flying lessons given in January. The payment was received in February. Under the accrual basis of accounting, when should Flyer record the revenue?

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  1. 30 October, 14:29
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    Under the accrual basis of accounting the Flyer should record the revenue in January.

    Explanation:

    Under accrual basis of reporting revenue or income is recorded when earned. For example in case of manufacturing companies sales are recorded when the product is delivered.

    Revenue is recorded on basis of performance obligation. The company shall record revenue on satisfcation of his performance obligation. If the payment is not received the company can record revenue against receivable.
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