Question

Under the realization principle, revenue is recognized as earned when there is reasonable certainty as to the collectibility of the asset to be received and:

The sales price has been collected.
The earnings process is virtually complete.
Production is completed.
A purchase order has been received.

Answer 1

Revenue is recognized as earned when there is reasonable certainty of collectibility and when the earnings process is virtually complete. This includes when the sales price has been collected and the production or service delivery is completed.

Step-by-step explanation:

Revenue is the income generated from selling products or providing services. According to the realization principle, revenue is recognized as earned when there is reasonable certainty of collectibility and when the earnings process is virtually complete. This means that revenue should be recognized when the sales price has been collected and the production or service delivery is completed.