Question

The principle that states revenue should be recognized at the time goods are sold or services rendered is called:

a. The matching principle.
b. The historical cost principle.
c. The revenue recognition principle.
d. The cash basis accounting principle.

Answer 1

The revenue recognition principle states that revenue should be recognized at the time goods are sold or services rendered, regardless of when the cash is received.

Step-by-step explanation:

The principle that states revenue should be recognized at the time goods are sold or services rendered is called the revenue recognition principle. This principle is a fundamental concept in accounting and it guides how companies record their revenue in their financial statements.

Under the revenue recognition principle, revenue is recognized when it is earned and measurable, regardless of when the cash is received. This means that even if the customer has not yet paid for the goods or services, the company can still recognize the revenue if it meets the criteria for revenue recognition.