The revenue recognition principle dictates that revenue should be recognized in the accounting records
A)when it is earned.
B)when expenses are incurred.
C)in the period that income taxes are paid.
D)when cash is received.

Question

Quizplus · Accepted Answer

The revenue recognition principle informs accounting practices to recognize revenue when it is earned, meaning when goods are delivered or services are rendered, regardless of when cash is received or expenses are incurred. This principle ensures that financial statements accurately reflect the company's performance and provide valuable information to investors and other stakeholders.

The Revenue Recognition Principle Dictates That Revenue Should Be Recognized