Final answer:
The correct answer is d. the revenue recognition principle, which guides the timing of revenue recording in financial statements to when it is earned and measurable, not necessarily when cash is received. Total Revenue is calculated as Price times Quantity, and it's a key component in determining both accounting and economic profit.
Step-by-step explanation:
Revenue is recorded when services have been performed or products have been delivered to customers, and the accounting principle that supports this reporting is d. the revenue recognition principle. This principle dictates that revenue should be recognized when it is earned and measurable, irrespective of when the cash is actually received. In contrast to the cash basis principle, which recognizes revenue only when cash is received, the revenue recognition principle ensures that a company's financial statements present a more accurate picture of its economic activities within a given time period.
Total Revenue is calculated by the formula: Total Revenue = Price x Quantity. This calculation is the basis for measuring the income a firm generates from its business activities. Additionally, it's essential to understand that accounting profit is the difference between total revenue and explicit costs, and does not consider implicit costs, which are included in the calculation of economic profit.