Recognition of revenue usually occurs when
A)the firm pays for the related expenses.
B)the revenue is earned, such as at the time of the sale or delivery of the goods.
C)a signed, legally binding contract is received.
D)an advance payment for the goods is received.
E)none of the above.

Question

Quizplus · Accepted Answer

Revenue is recognized when it is earned, which typically occurs at the time of sale or delivery of goods or services. This is in accordance with the revenue recognition principle, which states that revenue should be recognized when it is earned and the related obligations and expenses can be reasonably estimated. The other options (A, C, and D) are not necessarily indicative of revenue recognition.

Recognition of Revenue Usually Occurs When