Bill Tall Trucks sells new trucks and pays each salesperson a commission of $1,000 for each truck sold. During the month of August 2012, a salesperson, Phil, sold 3 new trucks. Bill Tall pays Phil on the 10th day of the month following the sale. Phil operates on the cash basis; the car dealer operates on the accrual basis. Which of the following statements is true? ________

A)

Phil will recognize revenue in the same month that the car dealer recognizes expense.

B)

Bill Tall will recognize commission expense in the amount of $3,000 in August.

C)

Phil will recognize commission revenue earned in the amount of $3,000 in August.

D)

Phil will recognize commission expense in the amount of $3,000 in September.

Question

Bill Tall Trucks sells new trucks and pays each salesperson a commission of $1,000 for each truck sold. During the month of August 2012, a salesperson, Phil, sold 3 new trucks. Bill Tall pays Phil on the 10th day of the month following the sale. Phil operates on the cash basis; the car dealer operates on the accrual basis. Which of the following statements is true? ________

A)	Phil will recognize revenue in the same month that the car dealer recognizes expense.
B)	Bill Tall will recognize commission expense in the amount of $3,000 in August.
C)	Phil will recognize commission revenue earned in the amount of $3,000 in August.
D)	Phil will recognize commission expense in the amount of $3,000 in September.

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