Question

A flower shop makes a large sale for $1,000 on November 30 and delivers the flowers the same day. The customer is sent a statement on December 5 and a check is received on December 10. The flower shop follows GAAP and applies the revenue recognition principle. When is the $1,000 revenue recognized in the accounting records?

Answer 1

Answer:

November 30

Explanation:

According to the revenue recognition principle, revenues are recognized when they are realized or realizable, and are earned no matter when cash is received.

Answer 2

Answer:

Explanation: The $1,000 revenue is recognized the day the sale was made and flowers delivered. Which is the 30th of November.

Following the above transaction, revenue is earned when a transaction has occurred which is the sale of $1,000 worth of flowers delivered the same day.

According to the Generally Accepted Accounting Principle, revenue is earned when there is an exchange of goods or services for cash or on account.

This means that it is not necessary that once the exchange has occurred, cash will be exchanged. It. The transaction can be in cash or on account. Which will end up in the cash/ bank or account receivable