When revenue has been earned, no entry is recorded until the related cash has been collected.

Question

Quizplus · Accepted Answer

This statement is false. The accrual accounting method recognizes revenue when it is earned, not when cash is collected. An entry is typically recorded at the time revenue is earned, regardless of when the related cash is collected. However, if the cash is not collected within a reasonable amount of time, an adjustment may be necessary to recognize the uncollectible amount as a bad debt expense.

When Revenue Has Been Earned, No Entry Is Recorded Until