Under cash-basis accounting, revenue from a service is generally recorded when:
Correct answer: C. Cash is received
- A. The service is completed
- B. The customer is billed
- C. Cash is received
- D. The accounting year ends
Explanation
Cash-basis accounting recognises revenue when money is actually received. Completion of the service or issuing an invoice may occur earlier but does not by itself create cash-basis revenue.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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