Firms recognize revenue
A)when they have completed an earnings process or performed most or all of their obligations to customers, usually the delivery of a product or service.
B)when they have received cash or a receivable capable of sufficiently reliable measurement.
C)using the percentage-of-completion method when the firms sell products under long-term contracts, such as construction companies.
D)using the completed contract method [U.S.GAAP, only] when firms cannot reasonably estimate revenues and costs.
E)all of the above

Question

Quizplus · Accepted Answer

All the options provided are correct ways in which firms can recognize revenue. Option A refers to the revenue recognition principle, which states that revenue is recognized when earned, typically upon the delivery of goods or services. Option B highlights the importance of the transaction being measurable and the firm having a right to payment. Option C and D describe specific accounting methods for recognizing revenue, particularly in long-term contracts, which are accurate under certain conditions or accounting standards.

Firms Recognize Revenue