The revenue recognition principle states that:
A)Revenue should be recognized in the period the cash is received.
B)Revenue should be recognized in the period goods and services are provided.
C)Revenue should be recognized in the balance sheet.

Question

Quizplus · Accepted Answer

The revenue recognition principle states that revenue should be recognized when goods or services are provided to the customer, regardless of when payment is received. This principle is important for accurate financial reporting and matching revenues with related expenses. Option A is incorrect because revenue may be recognized before or after cash is received. Option C is incorrect because revenue is recognized in the income statement, not the balance sheet.

The Revenue Recognition Principle States That