On a cash basis statement, revenue is recorded when it is received and deposited. On an accrual basis, revenue is recorded when it is:

• A. Collected and deposited
• B. Received but not yet deposited
• C. Invoiced to owners
• D. Earned, including amounts assessed to owners but not yet received

Answer: (D)

In accrual accounting, revenue is recognized when it is earned, not when cash is received. For a community association, this means revenue from assessments is recorded as soon as the obligation is created and the earning process is complete—often when the assessments are billed—even if the cash hasn’t been collected yet. This approach matches income to the period in which the service or obligation was provided, regardless of whether payment has actually arrived. The option that reflects revenue being earned, including amounts assessed to owners but not yet received, best captures this concept. The other options rely on cash receipt or timing tied to invoicing rather than when the earnings occur.