Question

The revenue recognition principle states that companies typically record revenue:

a.In the period in which we provide goods and services to customers.
b.In the period in which customers order goods and services.
c.In the period in which we received cash from customers for goods and services.
d.In the period in which goods and services are prepared to be sold to customers.

Answer 1

The revenue recognition principle states that companies typically record revenue in the period in which we provide goods and services to customers. Option a

Step-by-step explanation:

The revenue recognition principle states that companies typically record revenue in the period in which we provide goods and services to customers. This means that revenue is recognized when the company has fulfilled its obligations to the customer by delivering the goods or services.

For example, if a company sells a product to a customer on credit, the revenue is recorded at the point of sale, even if the cash payment is received at a later date.

On the other hand, if a customer places an order but the company has yet to deliver the goods or services, the revenue is not recognized until the company fulfills its obligation and provides the goods or services to the customer. Option a