Although there are exceptions, revenue is generally recognized at the time cash is collected.

Question

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Revenue is generally recognized at the time when it is earned, not when cash is collected. This is known as the accrual basis of accounting. However, there are certain situations where cash may be collected before or after revenue is recognized, such as when a customer pays in advance or revenue is recognized on an installment basis.

Although There Are Exceptions, Revenue Is Generally Recognized at the Time