Question

In June 30, a printing shop provides $1,000 of services to a customer to custom print restaurant menus. The customer is sent a bill on July 5 for the amount due. A check in the amount of $1,000 is received from the customer on July 25. The printing shop follows GAAP and applies the revenue recognition principle. When is the $1,000 sale recognized? July 5. July 1. July 25. June 30.

Answer 1

Answer:

The answer is: June 30

Explanation:

The revenue recognition principle states that revenue should be recognized on the period in which the company has substantially completed the earning process.

The printing shop delivered menus worth $1,000 on June 30, so we can consider that it had substantially completed the earning process.