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Question
The John Marketing Company provides advertising services to an investment company in year A but receives advertising fee in year B. The John Marketing Company recognizes this revenue in year A. This action of John Marketing Company is justified by:
The John Marketing Company provides advertising services to an investment company in year A but receives advertising fee in year B. The John Marketing Company recognizes this revenue in year A. This action of John Marketing Company is justified by:
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Solution
The correct option is A Accrual Basis of accounting
The concept in accrual basis of accounting is that accounting transactions should be recorded in the accounting periods when they actually occur, rather than in the periods when there are cash flows associated with them.
Accrual Basis of accounting
The concept in accrual basis of accounting is that accounting transactions should be recorded in the accounting periods when they actually occur, rather than in the periods when there are cash flows associated with them.
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