In classifying the elements of financial statements, the primary distinction between revenues and gains is the materiality of the amounts involved.

Question

Quizplus · Accepted Answer

The primary distinction between revenues and gains is not the materiality of the amounts involved. Revenues are recognized from the sale of goods or services in the course of normal business operations, while gains are recognized from transactions outside of the company's normal business activities, such as the sale of a long-term asset or investment. The materiality of the amounts involved may impact how they are reported or disclosed in the financial statements, but it does not change their classification as revenue or gain.

In Classifying the Elements of Financial Statements, the Primary Distinction