The revenue principle states that revenue will be recorded when?

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Originally Posted by jeremykc

the revenue principle states that revenue will be recorded when?

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Depends when it's EARNED.

In accrual-based accounting:
It should be recognized in the p&l in the period that it is earned.
If you've received payment in a period in advance of earning the revenue, then it is recorded on the balance sheet as Deferred Revenue. This liability should be relieved to the p&l in future period(s) as it is earned.

Hope this helps.

Quote:

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Originally Posted by LILY2609

Depends when it's EARNED.

In accrual-based accounting:
It should be recognized in the p&l in the period that it is earned.
If you've received payment in a period in advance of earning the revenue, then it is recorded on the balance sheet as Deferred Revenue. This liability should be relieved to the p&l in future period(s) as it is earned.

Hope this helps.

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Hey Lily,

Nice to see you here and I am glad you are joining in…

Just be on the lookout for obvious homework questions. This one clearly looks like homework to me but I could be wrong. Technically we should not answer homework here as this section is for real world questions. See this:

Ask Me Help Desk - Announcements in Forum : Accounting

However, if someone at least try’s to answer the question for themselves I will give them some help. If they don’t even try I usually ask the question be moved to the homework section my clicking (report inappropriate post) next to their post.

Also take a look at the expectations for giving homework help that can be found here:

Ask Me Help Desk - Announcements in Forum : Homework Help

Again glad to see you here and just wanted to bring these things to your attention.

Hi John -
Yes, I thought I would jump in and get my feet wet by providing some input on some easy questions. ;)

However, I definitely see what you're saying - MOST of the questions appear to be homework-related, unfortunately. I spent enough years doing homework problems - don't want to do them now - real life provides enough issues to resolve!

Thanks so much for the info and comments.

Accounting question, Arizona Magazine sells annual subscription for the 12 monthly magazine each year. The company collects cash in advance and then mails out the magazines to subscribes each month. Apply the revenue principle to determine. A. When Arizona Magazine should record the revenue for this situation B. The amount of revenue Arizona Magazine should record for the magazines mailed out January through March.

Arizona Magazine sells annual subscription for the 12 monthly magazines mailed out each year. The company collects cash in advance and then mails out he magazines to subscribers each month. A. the revenue principle to determine A when Arizona Magazine should record revenue for this situation B. the amount of revenue Arizona Magazine should record for the magazines mailed out January through March.