Revenue recognition criteria states that revenue is recognized at the same time that a decrease in an asset is recognized or an increase in a liability is recognized for profit generating activities.

Question

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Revenue recognition criteria typically require that revenue is recognized when it is earned and realizable, regardless of when cash is received or when a decrease in an asset or an increase in a liability occurs. This is based on the accrual accounting principle, not directly on changes in assets or liabilities.

Revenue Recognition Criteria States That Revenue Is Recognized at the Same