Question

The Star Company is a service entity that requires customers to place their orders 2 weeks in advance. Star bills its customers on the 15th day of the month following the date of service and requires that payment be made within 30 days of the billing date. Conceptually, Star should recognize revenue from its services at the date when
A. A customer places an order. B. The service is provided. C. A billing is mailed. D. A customer’s payment is received.

Answer 1

Answer:B. Services is provided

Explanation:

Revenue is recognised in a service contract once the services is provided, the amount of services and cost of providing the services can be realiably estimated , it's probable that economic benefits of the services will be enjoyed by the client and risk and rewards of ownership has been fully transferred to the client's.