The process of formally recording or incorporating an item in the financial statements of an entity is
A) allocation.
B) articulation.
C) realization.
D) recognition.

Question

Quizplus · Accepted Answer

Recognition is the process of formally recording or incorporating an item in the financial statements of an entity. This involves determining when and how to record an item in accordance with the applicable accounting standards and principles. Allocation refers to the process of assigning costs or expenses to specific cost centers or products, while articulation refers to the logical coherence and consistency of financial statements. Realization refers to the point in time when revenue or gains are considered earned and recognized according to accounting standards.

The Process of Formally Recording or Incorporating an Item in the Financial