You are studying with some classmates and are reviewing each other’s responses to the following question: 

“A company offering legal services requires all of its clients to pay a deposit of $500 during their initial appointment with a wills and estates lawyer. The lawyers normally take 10 days to complete drafting the will. Once the will has been completed, clients come back to the office to review them with the lawyer. If everything is satisfactory, they take the wills and are billed the balance ($700). All clients are given 30 days to make their payment. When would the revenue related to the legal services be recognized if the company used the cash basis of accounting? What about if it used the accrual basis of accounting?” 

Your classmate responded as follows: 

“If the company followed the cash basis of accounting, it would recognize $1,200 as revenue when the client pays their bill. At this point, the revenue has been earned and all of the cash has been received.

If the company followed the accrual basis of accounting, it could recognize $500 after the initial meeting because the lawyer has provided the service, so the revenue has been earned. The remaining $700 could be recognized when the client comes into the office and picks up their will.”

Required
Identify how your classmate’s answer could be substantively improved.