Which of the following statements about the critical event in the revenue-generation sequence is true?
A) The most common critical event used is the receipt of cash from the customer.
B) The critical event is the point that can be readily documented and at which all revenue is recognised.
C) There can never be several critical events in a firm's operating cycle.
D) Revenue can be recognised even though no action relating to the contract has been completed.

Question

Quizplus · Accepted Answer

The critical event in the revenue-generation sequence is the point at which a firm can readily document that all revenue has been recognized. This may not necessarily be the receipt of cash from the customer, as some contracts may have other critical events such as completion of a project or delivery of goods. While there typically is only one critical event in the revenue generation cycle, it is possible for there to be multiple critical events depending on the nature of the business. Finally, revenue cannot be recognized until an action relating to the contract has been completed.

Which of the Following Statements About the Critical Event in the Revenue-Generation