In September,a customer signed a contract to have his house painted and paid for the job in October.The painting company bought the paint in August on account and paid for it in September.The painting company painted the house in November.Assuming accrual basis accounting is used,the painting company should record the:
A)revenues in November and the expenses in September.
B)revenues and the expenses in September.
C)revenues and the expenses in November.
D)revenues in September and the expenses in August.

Question

Quizplus · Accepted Answer

The revenue recognition principle states that revenue is recorded the performance obligation is satisfied and the expense recognition principle says expenses are reported in the same period as the revenues they helped to generate.As a result,the revenues and expenses will be recorded in November.

In September,a Customer Signed a Contract to Have His House