A corporation sold goods for $10 million during 2007. Of this amount, $6 million were in cash, and $4 million was on account. However, the company collected $2 million of the sales on account during 2007. In conformity with the revenue principle, the amount of revenue that should be recognized in 2007 is:

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The revenue principle requires that revenue is recognized when it is earned, regardless of when the payment is received. In this case, the company earned $10 million from sales in 2007, including both cash sales and sales on account, so it should recognize $10 million in revenue for that year.

A Corporation Sold Goods for $10 Million During 2007