Consider the following events for Betterment Incorporated: January 1 Betterment purchases gasoline for $200 on account. January 7 Betterment advertises lawn mowing services for $100 per lawn. January 9 Betterment signs up 8 customers who pay a total of $800 cash. January 12 Betterment mows the lawns of the 8 customers and all gasoline purchased on January 1 is used. January 13 Betterment pays for the gasoline purchased on January 1. Under accrual-basis accounting, what is the appropriate day to record the revenues related to lawn services?

Question

Grimes

Business

4 June, 06:26

Consider the following events for Betterment Incorporated: January 1 Betterment purchases gasoline for $200 on account. January 7 Betterment advertises lawn mowing services for $100 per lawn. January 9 Betterment signs up 8 customers who pay a total of $800 cash. January 12 Betterment mows the lawns of the 8 customers and all gasoline purchased on January 1 is used. January 13 Betterment pays for the gasoline purchased on January 1. Under accrual-basis accounting, what is the appropriate day to record the revenues related to lawn services?

+1

Answers (1)

Know the Answer?

Camryn Holland · Answer 1

January 9 Betterment signs up 8 customers who pay a total of $800 cash.

Explanation:

Under the accrual basis accounting, revenues are recognized as follows:

Revenue is recognized when both of the following conditions are met:

a. Revenue is earned.

b. Revenue is realized or realizable.

Revenue is earned when products are delivered or services are provided.

Realized means cash is received.

Realizable means it is reasonable to expect that cash will be received in the future.