Revenue should be recognized,only when collectability is reasonably assured.

Question

Quizplus · Accepted Answer

This is in accordance with the revenue recognition principle of GAAP (Generally Accepted Accounting Principles) which states that revenue should be recognized when it is earned and when collectability is reasonably assured. This helps ensure that revenue is not recognized prematurely, before it is actually realized as cash or cash equivalents, and prevents overstatement of revenue and understatement of bad debt expenses.

Revenue Should Be Recognized,only When Collectability Is Reasonably Assured