Are advanced receipts from customers treated as revenue at the time of receipt? Why or why not?
A)Yes, they are treated as revenue at the time of receipt because the company has access to the cash.
B)No, the amount of revenue cannot be adequately determined until the company completes the work.
C)Yes, the intent of the company is to perform the work and the customer is confident that the services will be completed.
D)No, revenue cannot be recognized until the performance obligation is satisfied.

Question

Quizplus · Accepted Answer

Revenue cannot be recognized until the performance obligation is satisfied according to the revenue recognition principle. Advanced receipts are considered liabilities until the service or product is delivered.

Are Advanced Receipts from Customers Treated as Revenue at the Time