At the end of the accounting period, when the income statement is created from the revenue and expense accounts in the journal, the income statement reflects only the

Question

for the service or product that was actually provided during that period, not the entire amount of the payment received.

Answer 1

At the end of the accounting period, when the income statement is created from the revenue and expense accounts in the journal, the income statement reflects only the earned revenue for the service or product that was actually provided during that period, not the entire amount of the payment received. This follows the accrual basis of accounting, which recognizes revenue when it is earned, regardless of when cash is received.