A company accepts a customer's order on November 30 and immediately delivers the goods to the customer. On December 1, the compa
ny sends the customer an invoice stating payment is due no later than January 1. The company receives a check from the customer for the full amount due on December 22. The company follows the revenue recognition principle and accrual-basis accounting. On what day should the company recognize revenue for this order?A) November 30B) January 1C) December 31D) December 22E) December 1
Based on accrual principle of accounting, revenue is recognized when it is earned and not necessarily when cash is received.
Revenue is said to be earned when the obligation of the delivery of service or goods sold has been met.
As such, where a company accepts a customer's order on November 30 and immediately delivers the goods to the customer, revenue is said to be earned (and will be recognized ) on the day of delivery.
A good or service is said to be highly elastic if there is a a slight change in price this will cause a sharp change in the quantity. Usually these kinds of products are readily available in the market - example is jewelry. lottery ticket.
The government will be able to improve the road system, encouraging more people to drive on vacations. Social Security benefits will provide income for the elderly and disabled, allowing them to spend money, thus boosting the economy. Airline security might be slightly improved because of the ability to hire, but there will not be enough money to provide the latest equipment.
