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17 November, 05:24

If a company is using the accrual basis accounting method, when should it record its earned revenue?

a. when cash is received, even though services may be rendered at a later date

b. when services are rendered, even though cash may be received at a later date

c. when services are completely rendered and cash is received

d. when cash is received, 30 days after the completion of the services

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  1. 17 November, 06:56
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    Answer: b

    Under the accrual basis of accounting, expenses are matched with the revenues related to it and/or are reported when the expense occurs, and not just when the cash is paid. The company should record its earned revenue when services are rendered. Payment may come at a later date.
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