The revenue recognition principle indicates that revenue should be recognized in the accounting records
A) when it is earned.
B) in the period that income taxes are paid.
C) when cash is received.
D) when expenses are incurred.

Question

Quizplus · Accepted Answer

The revenue recognition principle requires revenue to be recognized in the accounting records when it is earned, meaning when the goods or services have been delivered or performed and the customer is obligated to pay. This can occur before or after cash is received or before or after expenses are incurred.

The Revenue Recognition Principle Indicates That Revenue Should Be Recognized