A company that sells merchandise to customers should normally recognize

Question

Quizplus · Accepted Answer

The generally accepted accounting principle for revenue recognition is to recognize revenue and the related expenses in the period they are earned, regardless of when the payment is received. This is known as the accrual basis of accounting. It provides a more accurate reflection of a company's financial performance as compared to the cash basis of accounting. Under the cash basis, revenue and expenses are recognized only when cash is received or paid out, which may not accurately represent the company's actual financial condition. Therefore, choice B is the best option.

A Company That Sells Merchandise to Customers Should Normally Recognize