The rule that (1) requires revenue to be recognized at the time it is earned, (2) allows the inflow of assets associated with revenue to be in a form other than cash, and (3) measures revenue as the amount of cash plus the cash equivalent value of any noncash assets received from customers in exchange for goods or services is called the
A) going concern principle
B) historical cost principle
C) revenue recognition principle
D) currency principle
E) business entity principle

Question

Quizplus · Accepted Answer

The revenue recognition principle is the accounting standard that governs revenue recognition. It requires companies to record revenue at the time it is earned, even if the payment has not been received. It also allows companies to receive assets in forms other than cash and requires them to measure revenue at the amount of cash plus the cash equivalent value of any noncash assets received. The other answer choices are not applicable to this specific principle.

The Rule That (1) Requires Revenue to Be Recognized at the Time