As a general principle, under the accrual basis of accounting, the firm recognizes revenue when the transaction meets which of the following conditions?
A)Revenue is recognized when there is completion of the earnings process, only.
B)Revenue is recognized when there is receipt of assets from the customer, only.
C)Revenue is recognized when there is completion of the earnings process and receipt of assets from the customer.
D)Revenue is recognized when there is expiration of the warranty period, only.
E)Revenue is recognized when there is receipt of the final payment, only.

Question

Quizplus · Accepted Answer

Under the accrual basis of accounting, revenue is recognized when the earnings process is substantially complete and the revenue is realizable or realized, meaning there is either receipt of assets (usually cash or receivables) from the customer or a firm commitment from the customer that is measurable in terms of money. This principle is encapsulated in the revenue recognition principle, which does not necessarily require the receipt of the final payment or the expiration of the warranty period for revenue to be recognized.

As a General Principle, Under the Accrual Basis of Accounting