Worldatwork c8 Exam - Topic 1 Question 83 Discussion

Actual exam question for Worldatwork's c8 exam

Question #: 83
Topic #: 1

The Alpha company ships an order to a customer on March 1st and invoices the customer for the product with the shipment, with payment terms of net 30 days. The customer's payment is received on April 5th. The payment clears the bank and shows on Alpha's account on April 8th. If Alpha is using accrual accounting, when does it record the revenue for this sale?

AMarch 1st

BMarch 31st

CApril 5th

DApril 8th

Show Suggested Answer

Suggested Answer: A

by Deonna at Sep 13, 2024, 03:05 AM

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Ozell

10 months ago

Yup, March 1st is the right answer!

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Charisse

10 months ago

I thought you had to wait for the cash to actually come in.

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Laurel

10 months ago

Wait, so they record it before the payment clears? That seems odd.

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Cristal

10 months ago

Totally agree, it's all about when the sale happens, not when payment is received.

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Elroy

10 months ago

Revenue is recorded on March 1st under accrual accounting.

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Twila

11 months ago

I thought it might be when the payment clears, but I guess that's not how accrual accounting works? So maybe March 1st?

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Malinda

11 months ago

I practiced a similar question, and I believe it was about recognizing revenue at the point of sale, so March 1st feels right.

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Aja

11 months ago

I'm a bit unsure, but I remember something about recognizing revenue when it's earned, which seems like it would be March 1st too.

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Tiffiny

11 months ago

I think the revenue should be recorded on March 1st since that's when the shipment and invoice happened.

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Dierdre

11 months ago

I'm pretty confident the answer is D. The revenue is recorded when the payment clears the bank on April 8th, not when it's received on April 5th.

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Quiana

11 months ago

Based on the accrual accounting concept, I believe the revenue should be recorded on March 31st, since that's the end of the 30-day payment period.

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Tiera

11 months ago

I'm a little confused on the difference between when the payment was received and when it cleared the bank. Does that matter for revenue recognition?

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Hester

11 months ago

Okay, I've got this. The key is that the revenue should be recorded when the customer's payment is received, which is April 5th.

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Remona

11 months ago

Hmm, this seems like a tricky one. I'll need to think through the accrual accounting principles carefully to determine the right answer.

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Joana

1 year ago

Wait, is this a trick question? What if the answer is 'all of the above' because it's a leap year or something?

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Charolette

1 year ago

C) April 5th

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Eladia

1 year ago

The revenue is recorded when the order is shipped.

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Alyce

1 year ago

A) March 1st

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Elenor

1 year ago

Hmm, I'm a bit stumped on this one. Maybe I should have paid more attention in my accounting class.

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Donette

1 year ago

Oh, I see. Thanks for the clarification!

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Benton

1 year ago

That's correct, revenue should be recognized when the product is shipped.

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Carin

1 year ago

You should record the revenue on March 1st.

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Kenia

1 year ago

I'm going with April 5th. That's when the customer's payment was received, so that's the revenue recognition date.

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Nicolette

1 year ago

User3: I'm going with April 5th. That's when the customer's payment was received, so that's the revenue recognition date.

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Gregoria

1 year ago

User2: I agree with User1, revenue should be recognized when the product is shipped.

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Helga

1 year ago

User1: I think it should be March 1st, when the order was shipped.

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Alline

1 year ago

April 8th, for sure. That's when the payment actually showed up in Alpha's account, which is the key date for accrual accounting.

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Jani

1 year ago

Exactly. It ensures that financial statements accurately reflect the company's performance during a specific period.

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Pansy

1 year ago

That makes sense. It's all about matching revenue with the period in which it was earned.

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Sharee

1 year ago

So, the revenue for this sale would be recorded on April 8th when the payment cleared the bank.

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Chau

1 year ago

Yes, you're right. Accrual accounting records revenue when it is earned, regardless of when payment is received.

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Vallie

1 year ago

March 1st, of course! That's when the order was shipped and invoiced. Easy peasy.

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Wai

1 year ago

Exactly, the revenue should be recorded on March 1st since that's when the sale was made.

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Annett

1 year ago

March 1st

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Dottie

1 year ago

But shouldn't revenue be recognized when payment is received? So, it should be recorded on April 5th.

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Cassandra

1 year ago

I agree with Leonora, because that's when the order was shipped.

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Leonora

1 year ago

I think the revenue should be recorded on March 1st.

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