Which of the following is not a proper application of the revenue recognition principle?
A)Recording the sale of merchandise on credit as sales revenue.
B)Recording rent received in advance as unearned rent revenue.
C)Recording interest revenue when cash is collected rather than when earned.
D)Reducing the unearned service revenue account for service revenue performed at the end of the accounting perioD.Revenue is recognized when earned, not upon the collection of cash.

Question

Quizplus · Accepted Answer

Revenue recognition principle states that revenue is recognized when it is earned, not when cash is collected. Therefore, recording interest revenue only when cash is collected rather than when earned does not follow the revenue recognition principle. A, B, and D are proper applications of the principle.

Which of the Following Is Not a Proper Application of the Revenue