Final answer:
The principle that dictates revenues should be recognized when earned, regardless of the cash received time, is known as the revenue recognition principle. It's essential for depicting a company's financial performance accurately in a period. The benefit principle and ability to pay principle concern tax theory and are unrelated to this accounting principle.
Step-by-step explanation:
The principle that states that revenues should be recognized when earned, regardless of when cash is received from the customer, is known as the revenue recognition principle. This accounting principle, which is fundamental in accrual accounting, dictates that revenues are to be recorded on the income statement when they are earned, not necessarily when the cash is received. The revenue recognition principle allows companies to provide a more accurate picture of their true financial performance in a given period.
On the other hand, the principles discussed in the student's question do not directly address the criteria for revenue recognition. The provided information talks about the benefit principle and ability to pay principle related to tax theory, where the former suggests that people should pay taxes proportional to the benefits they receive and the latter implies that those who can afford to pay more taxes should do so. These are separate concepts from the revenue recognition principle in accounting, which concerns how businesses report their income.