According to Generally Accepted Accounting Principles (GAAP),revenue is recognized as income when:
A)a contract is signed to perform a service or deliver a good.
B)the transaction is complete and the goods or services are delivered.
C)payment is requested.
D)income taxes are paid on the revenue earned.
E)managers decide to recognize it.

Question

Quizplus · Accepted Answer

According to GAAP, revenue is recognized as income when the transaction is complete and the goods or services are delivered. This is known as the "realization principle." Signing a contract or requesting payment does not necessarily mean that revenue has been earned. Managers cannot simply decide to recognize revenue. Income taxes are not a factor in determining when revenue should be recognized.

According to Generally Accepted Accounting Principles (GAAP),revenue Is Recognized as Income