Financial Reporting and Analysis Q71

0. A customer orders customized industrial equipment from a manufacturing company in June. The equipment was shipped and delivered to the customer in August. The customer was invoiced in August and payment was made to the manufacturing company in September. The most appropriate month in which the manufacturing company should show the revenue is:

Answer
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Option : B
Explanation : The appropriate time to recognize revenue would be in the month of August; the risks and rewards have been transferred to the buyer (shipped and delivered), the revenue can be reliably measured, and it is probable that the economic benefits will flow to the seller.

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