Recognition of revenue may result in which of the following?
A) a decrease in assets.
B) an increase in assets.
C) an increase in liabilities.
D) a decrease in expenses.

Question

Quizplus · Accepted Answer

Recognition of revenue is the process of recording revenue in the financial statements when it has been earned, regardless of whether the cash has been received or not. When revenue is recognized, it results in an increase in assets, such as accounts receivable, cash, or inventory, depending on the nature of the transaction. It does not result in an increase in liabilities or a decrease in expenses. While revenue recognition may result in a decrease in assets in certain situations, such as when recognizing revenue for a sale that results in a return or refund, this is not a typical outcome.

Recognition of Revenue May Result in Which of the Following