Question

A flower shop makes a large sale for $1,000 on November 30. 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 considered to be earned:_________

Answer 1

Answer:

November 30

Explanation:

Based on Generally Accepted Accounting Principles,( GAAP) , revenue can be recognized once the goods/servicehas been delivered. whenever sales is made, may be the company has gotten the payment for the sale of has not gotten it. The revenue recognition principle can be regarded as basis of accrual accounting as well as matching principle, all these helps to know the accounting period that revenues as well as expenses can be recognized.

From the question, on 30th November, there was large sales made by the flower shop , though payment received on December 10, Therefore, the $1,000 considered to be recognized on November 30.