Question

Larry uses an accrual method of accounting and a calendar year. On December 30, 2019, he completed work for a client and submitted his bill. The client had no dispute with the work done or the amount of the bill. The client paid Larry's bill in 2020. In which year should he report the income from this project?

He should report the income in either 2019 or 2020.

He should report half of the income in 2019 and half in 2020.

He should report the income in 2019.

He should report the income in 2020.

Answer 1

Question

Answer : He should report the income in 2019

Larry uses an accrual method of accounting and a calendar year.

under accrual method of accounting wherer revenue or expenses are done in a accounting year instead of payment is received or paid .

the Accrual method adopt the matching principle, under that revenue and expenses should be recognised in the same accounting period.

cash accounting is accounting method under which transaction recognizes only when payment is done and money is received.