The Rainbow House Painting Company has been contracted to strip,repair,prime,and paint a house for $3,600 to be paid in instalments as phases of the work are completed.The company has not started painting and has only received one payment.The company decides to record $3,600 as revenue.This decision violates the:
A) fourth condition of the revenue principle which states that regulatory approval be acquired.
B) second condition of the revenue principle,that measurability is reasonably certain.
C) third condition of the revenue principle that collectability is reasonably assured.
D) first condition of the revenue principle,that risks and rewards have passed or the earnings process is substantially complete.
Correct Answer:
Verified
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