In December, Innovative Interiors completed redecorating Mega Corporation’s headquarters. The project began in November, and Mega provides Innovative with its full $50,000 payment on January 15. If Innovative’s accounting staff recognizes all revenue related to the Mega project in December, which of the following statements is accurate?
Select answer from the options below
Innovative has violated the revenue recognition principle because this principle states that all revenue related to the Mega project be recognized in January.
Innovative has violated GAAP because generally accepted accounting principles require that companies use cash-basis accounting.
Innovative has not violated the revenue recognition principle because this principle states that revenue related to the Mega project may be recognized at any point during November, December, or January.
Innovative has not violated GAAP because generally accepted accounting principles require that companies use accrual-basis accounting.