Asked by Fatin Izzati on Jun 24, 2024
Verified
When money is received from a customer prior to the delivery of goods or the performance of a service, it is recorded as revenue.
Money Received
The sum of cash or cash equivalents that an entity acquires from various sources, including sales or funding.
Revenue
The sum of money earned from the sale of products or services central to the business's main activities.
- Gain an understanding of the essential rules for recognizing revenue and expenses in the field of accounting.
- Comprehend the variances between cash basis and accrual basis accounting.
Verified Answer
MA
Mae Anne BurcaJun 30, 2024
Final Answer :
False
Explanation :
When money is received from a customer prior to the delivery of goods or the performance of a service, it is recorded as a liability (specifically, unearned revenue or deferred revenue) on the balance sheet, not as revenue. Revenue is recognized when the goods are delivered or the service is performed.
Learning Objectives
- Gain an understanding of the essential rules for recognizing revenue and expenses in the field of accounting.
- Comprehend the variances between cash basis and accrual basis accounting.
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