During November 2015,Asler Inc.performs consulting services.The client does not pay Asler until January,2016.
A) Using the accrual basis of accounting, the revenue is reported in January 2016.
B) Using the cash basis of accounting, the revenue is reported in November 2015.
C) Using the accrual basis of accounting, the revenue is reported in November 2015.
D) Using the accrual basis of accounting, the revenue is reported when Asler's expenses are paid.

Question

Quizplus · Accepted Answer

Under the accrual basis of accounting, revenue is recognized when it is earned, regardless of when the payment is received. Therefore, the revenue for the consulting services performed in November 2015 is reported in November 2015.