The principle of revenue recognition results in
A)recording revenue in the income statement
B)recording realized revenue when it is earned
C)measuring relevant and reliable information whenever a transaction has occurred
D)assuring the existence of all amounts recorded as net income

Question

Quizplus · Accepted Answer

The principle of revenue recognition requires that revenue should be recognized when it is earned, regardless of whether it has been received or not. This means that revenue should only be recorded in the income statement when goods or services have been delivered, and the company has a legal right to payment. The principle ensures that revenue is recorded in the correct period and matches with the expenses incurred to generate that revenue.

The Principle of Revenue Recognition Results in