When recognizing revenue over time on a long-term contract, amounts billed and the cash actually received affect income recognition.

Question

Quizplus · Accepted Answer

The recognition of revenue over time on a long-term contract is based on the progress of the contract work, regardless of the amounts billed or cash received. The revenue recognized should reflect the amount of work completed and the related expenses incurred. Therefore, the timing of billing and receipt of cash do not affect income recognition in this scenario.

When Recognizing Revenue Over Time on a Long-Term Contract, Amounts