Final answer:
According to the revenue recognition principle, interest revenue is recorded when it is earned, not when cash is received.
Step-by-step explanation:
The statement in the question is not entirely accurate. According to the revenue recognition principle, interest revenue is recorded when it is earned, not when cash is received.
For example, let's say a company lends money to a debtor and charges interest on that loan. The company would recognize interest revenue as it accrues over time, based on the terms of the loan agreement. This means that even if the cash is not received from the debtor on the maturity date, the company still recognizes the interest revenue.
It's important to note that this principle applies to accrual-based accounting, which is the most common method used in financial reporting.