During the first month of operations, Kelly's Tax Service provided services and billed customers in the amount of $6000. By the end of the first month, $3600 had been collected and it was expected that the other $2400 would be collected during the following month. On Kelly's statement of comprehensive income for the first month, what amount of revenue should be reported?
A) $0
B) $2400
C) $3600
D) $6000

Question

Quizplus · Accepted Answer

Under the accrual basis of accounting, revenues are recognized when earned, not necessarily when cash is received. Since Kelly's Tax Service provided services and billed customers for $6000, the entire amount is recognized as revenue for the month, regardless of the cash collection timing.

During the First Month of Operations, Kelly's Tax Service Provided