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On May 5, Johnson Plumbing receives a phone call from a customer needing a new water heater and schedules a service vist for May 7 On May ? Johnson installs the new water heater. The customer pays for services on May 10. According to the revenue recognition principle, on which date should Johnson record service revence? Multiple Choice a) Every over the twee dates b) May 7 date of services c) May 10 (dure of cash receipt d) May date of phone call
On May 5, Johnson Plumbing receives a phone call from a customer needing a new water heater and schedules a service vist for May 7 On May ? Johnson installs the new water heater. The customer pays for services on May 10. According to the revenue recognition principle, on which date should Johnson record service revence? Multiple Choice a) Every over the twee dates b) May 7 date of services c) May 10 (dure of cash receipt d) May date of phone call
Final answer:According to the revenue recognition principle, Johnson Plumbing should record the service revenue on May 7, the date ofservice completion.This is because revenues are recognized when they are earned, regardless of when payment is received.Explanation:According to therevenue recognition principlein accounting, revenues are recognized when they are realized or realizable, and when they are earned (no matter when cash is received). In the case of Johnson Plumbing, the service was completed and thus the revenue was earned onMay 7, the date of service.The revenue recognition principle is vital because it ensures financial statements are accurate and comparable over time. So even though payment was received on May 10, the service was completed and revenue earned on May 7, making this the correct date to record the revenue.Learn more about Revenue Recognition Principle here:brainly.com/question/33537995#SPJ11...