Why is the timing of revenue recognition important?

Question

Quizplus · Accepted Answer

The timing of revenue recognition is important because it affects both the net income and the recognition of certain expenses. Revenues increase net income, while triggering the recognition of certain expenses can reduce net income. Therefore, both choices A and B are correct. The declaration of dividends and increases in retained earnings are not directly related to the timing of revenue recognition.

Why Is the Timing of Revenue Recognition Important