At what point would you expect revenue from sales of building materials to be recognised?
A) During production
B) On completion of production
C) At point of sale or delivery
D) When cash is received

Question

Quizplus · Accepted Answer

Revenue from sales of building materials should be recognized at the point of sale or delivery, when the risks and rewards of ownership have been transferred to the buyer. This is in accordance with the revenue recognition principle, which requires revenue to be recognized when it is earned, regardless of when cash is received. Option A is incorrect because revenue should only be recognized when it is earned, not during production. Option B is incorrect because revenue should not be recognized until the product is sold or delivered. Option D is incorrect because revenue should be recognized before cash is received, as long as the risks and rewards of ownership have been transferred to the buyer.

At What Point Would You Expect Revenue from Sales of Building