Revenue should not be recognized until:
A) The seller has transferred goods or services to a customer.
B) Contracts have been signed and payment has been received.
C) Work has been performed and customer has been billed.
D) Collection has been made and warrantees have expired.

Question

Quizplus · Accepted Answer

Revenue should not be recognized until the seller has transferred goods or services to the customer. This is in accordance with the revenue recognition principle stating that revenue should be recognized when it is earned, which means that the seller has provided the goods or services and the buyer has the right to use or benefit from them. Options B, C, and D are incorrect because they do not align with this principle. Signing contracts, billing customers, and collecting payment may be part of the transaction process, but they do not necessarily mean that revenue has been earned.

Revenue Should Not Be Recognized Until