Under accrual accounting, which of the following statements about revenue recognition is true?
A)Revenue recognition is always straightforward.
B)Revenue can only be recognized when the goods are delivered.
C)Revenue can only be recognized when the expenses are paid.
D)Revenue recognition should occur when the entity enjoys the economic benefit.

Question

Quizplus · Accepted Answer

Under accrual accounting, revenue recognition should occur when the entity enjoys the economic benefit. This means that revenue should be recognized when the earnings process is complete and the entity has earned the right to receive payment. It does not depend on the timing of receipt of cash or delivery of goods. Therefore, option A and B are incorrect. Option C is also incorrect as revenue recognition is not dependent on whether the expenses are paid or not.

Under Accrual Accounting, Which of the Following Statements About Revenue