Determining Sales Revenue The management of Brainway Corporation reported sales revenue of $655,000 for the month of September. Sales revenue consists of the following:
1. A total of $420,000 was received from customers who came to the store and made immediate payment; they took their purchases with them.

2. An additional $65,000 of products were sold to customers with established credit who came to the store and picked up their purchases, but have not yet paid for their purchases.
3. Advance payments of $80,000 were received from customers who ordered products that Brainway will deliver during October.
4. Orders for $90,000 of sales were received prior to the end of September. The goods were prepared for shipping, but were not yet sent.
Assuming income is measured on an accrual-accounting basis:

a. Explain why or why not each item listed is appropriately included in Brainway’s sales revenue for September.

b. Compute the total revenue that should be reported for September.

c. Which of the items listed above would be reported in the same period under both cash-basis and accrual-basis accounting?

d. Why is focusing on the completion of the earning process rather than the receipt of cash important for the recognition of revenue? Why does accrual-basis revenue recognition provide more useful information for external decision makers?