A customer purchased a drill press on November 14 on account from Sears. The drill press was delivered two weeks later. The customer paid for the drill press on December 5. When should Sears record the revenue for this transaction according to the revenue recognition principle? Group of answer choices:
a. November
b. December
c. One-third in November and two-thirds in December.
d. Evenly in each of the two months.
Answer:
a. November
Explanation:
Revenue Recognition Principle means that Revenue should be recorded when goods or services are provided or delivered to customer not when payment is received or order is placed.
A customer purchased a drill press on November 14 from sear. And drill press delivered two weeks later ( i.e, by November 28 ). customer made payment for drill press on December 5.
According to the Revenue Recognition Principle, Sear should record the Revenue for this transaction on November when the drill press was delivered by Sear to the customer.
Sear should neither record revenue on the date of purchase by customer nor on the date of payment received.
A customer purchased a drill press on November 14 on account from Sears. The drill press...
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