Under which of the following circumstances would revenue normally be recognised?
A) A customer pays an overdue account.
B) A customer pays for goods in advance of production.
C) The business makes a cash purchase of merchandise.
D) The business makes a cash sale of merchandise.

Question

Quizplus · Accepted Answer

Revenue is normally recognized when a business makes a cash sale of merchandise, as this represents the point at which the revenue is earned. Option A represents the collection of a previously recognized revenue, option B represents a pre-payment, and option C represents a purchase transaction, none of which indicate the earned revenue.

Under Which of the Following Circumstances Would Revenue Normally Be