Question

The revenue recognition principle dictates that revenue should be recognized in the accounting period

a.before it is earned.
b.after it is earned
c.in which the performance obligation is satisfied.
d.in which it is collected.

Answer 1

The revenue recognition principle requires revenue to be recognized when the performance obligation is satisfied, which is when goods or services are provided.

Step-by-step explanation:

The revenue recognition principle dictates that revenue should be recognized when the performance obligation is satisfied. This means that revenue is recorded in the accounting period in which the goods or services are delivered, regardless of when the payment is actually received. This principle ensures that the financial statements provide a transparent and consistent view of the company's revenues.