Question

A flower shop makes a large sale for $1,500 on June 30th. The customer is sent an invoice on July 5th, and a check is received on July 10th. The flower shop follows GAAP and applies the revenue recognition principle. When should the $1,500 of revenue be recognized?

Answer 1

Answer:

June 30

Explanation:

According to the revenue recognition principle, the transaction should be recorded in the books of accounts when the sale is made. It records that revenue which is earned and the possibility of the receipt of cash should be high.

It records that when the product and services are sold to the customer and in return customer received it. Whether the payment received later but the sale is made.

So, on June 30, the revenue should be recognized.