Question

A company with a December 31 fiscal year end sold and delivered $5,000 worth of inventory on December 15, 2016 with payments of $1,200 collected on December 28, 2016 and $3,800 collected January 25, 2017. Under the accrual method of accounting, what amount of revenue would be recognized in 2016?

Answer 1

Answer:

$5,000 of revenue will be recognized in 2016

Explanation:

Under accrual accounting the revenue must be recorded when they are realized or realizable means when seller has assurance that payment will be collected.

As on December 15, 2016 the delivery of the products has been made so the seller has realizable Income.

All the Revenue of $5,000 should be recognized because it hasbeen realized.