Under which one of the following situations can a company recognize revenue under Generally Accepted Accounting Principles?
A) A customer signs a contract to purchase goods to be delivered in two weeks.
B) A company completes production of a customer order to be delivered in two weeks.
C) A company ships the goods for which it received a deposit two weeks ago.
D) A company receives a cash deposit from a customer to deliver goods in two weeks.
E) A company purchased raw materials to complete production of a customer order.

Question

Quizplus · Accepted Answer

Revenue recognition under Generally Accepted Accounting Principles (GAAP) occurs when the performance obligation is satisfied, which typically is when goods or services are transferred to the customer. In option C, shipping the goods indicates that the company has fulfilled its performance obligation, allowing it to recognize revenue.

Under Which One of the Following Situations Can a Company