If a Company performs and completes all services in year 1 b

If a Company performs and completes all services in year 1, but does not receive cash for the services until year 2, in which year should the Company record revenue?

A. Year 1

B. Year 2

Solution

Revenue should be recorded when the company has rendered the services, irrespective of whether cash is received or not. Since in the current case, the services have been rendered in Year 1, revenue should be recognised in Year 1, irrespective of the fact that cash is received in year 2. Rendering of service is the point of recognition of revenue.