The revenue recognition principle states that:

Question

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The revenue recognition principle states that revenue should be recognized in the period earned, which means that revenue should be recognized when a company has fulfilled its obligations to the customer, regardless of when payment is received. This principle ensures that financial statements accurately reflect a company's financial performance during a specific period. Options A, C, and D are incorrect because revenue recognition does not depend on cash received, does not go on the balance sheet as revenue, and revenue is not a component of common stock.

The Revenue Recognition Principle States That