3 of 15 Mr. Lincoln has his own CPA firm. A client sends him the following email

Question

3 of 15 Mr. Lincoln has his own CPA firm. A client sends him the following email: Dear Mr. Lincoln, As you know, I am a plumber. On October 29th I received a phone call from a customer asking me to do some plumbing for their house that is being remodeled. We agreed that I would meet them and provide plumbing services for them on November 20th. I provided the services on November 20th, but they were unable to pay me that day. I gave them an invoice for $350. Today, December 5th, I received their $350 check as payment. When am I able to recognize the $350 in revenue? Thank you! Sam Smith Based on the Revenue Recognition Principle, when should Mr. Lincoln tell Sam to recognize revenue? October 29th November 20th December 5th O When Sam cashes the $350 check

Explanation / Answer

Revenue should be recognized for a service when the service has been provided. Realization of cash is does not stop revenue recognition

As we can find, service has been provided on November 20th. So, revenue should be recognized on that day

So, as per above discussion, option B is the correct option

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