Final answer:
The statement regarding revenue recognition by companies is true. Revenue is recognized when goods or services are provided, reflecting the expected amount companies will receive, which aligns with generally accepted accounting principles.
Step-by-step explanation:
The statement given by the student pertains to the recognition of revenue by companies when goods or services are delivered to customers. To answer the student's multiple-choice question, the statement is true. Companies recognize revenue when goods or services are transferred to customers for the amount they expect to be entitled to receive in exchange for those goods or services. This concept is in accordance with generally accepted accounting principles (GAAP) and reflects the accrual basis of accounting, where revenue is recognized when earned, not necessarily when cash is received.
Revenue is seen as a critical part of a company's earnings and can influence the firm's financial health and its stock price. Hence, understanding when and how to recognize revenue is essential for businesses and investors alike.