Boulder Co. uses the accrual basis of accounting. Boulder Co. receives cash from customers in October for services to be performed in December. Which of the following is true?
A)Boulder Co.should record revenue in October.
B)Boulder Co.should record revenue in December.
C)Boulder Co.should record the receipt of cash in December.
D)None of the answers listed.

Question

Quizplus · Accepted Answer

According to the accrual basis of accounting, revenue should be recognized when it is earned, regardless of when the cash is received. Since the services are to be performed in December, the revenue will be earned in December and should be recorded at that time. Therefore, Boulder Co. should record revenue in December.