Question
Omar owns a catering service company that provides food and beverage services for events such as weddings and corporate events. He uses the accrual basis
Omar owns a catering service company that provides food and beverage services for events such as weddings and corporate events. He uses the accrual basis of accounting to record his company's financial transactions. Here are some of the transactions that occurred during the year:
1- On January 1, Omar signs a contract with a client to provide catering services for their wedding on July 1. The total contract amount is SAR 25,000. When should Omar recognize the revenue for this transaction under the accrual basis?
2- On July 1, Omar provides catering services to the client from the January 1 contract. The client pays the full amount of SAR 25,000 on the day of the event. When should Omar recognize the revenue for this transaction under the accrual basis?
3- On October 1, Omar provides catering services to a corporate client and invoices them for SAR 12,000. The payment is not received until November 15. When should Omar recognize the revenue for this transaction under the accrual basis?
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