Final Answer:
The condition that does not need to be met for an item to be recorded as revenue is: C. The revenue must be received in cash.
Step-by-step explanation:
Revenue recognition doesn’t h.i.n.g.e on the immediate receipt of cash (option c). Instead, it depends on earned income, measurability, and the ability to determine associated costs. Companies often record revenue when a service is performed or a product is delivered, regardless of whether the payment is made immediately or at a later date.
Revenues must be earned through the delivery of goods or services (a), and the amount must be measurable (b) to accurately record it in financial statements. Additionally, the costs of generating the revenue (d) need to be reasonably determinable to ensure accurate profit calculations.
The correct answer, c, emphasizes that revenue recognition is not contingent on the immediate receipt of cash but rather on meeting other criteria like earning, measurability, and cost determination.
Correct answer: Option C
Complete question:
Which of the following is not a condition that must be met for an item to be recorded as revenue?
- a. Revenues must be earned.
- b. The amount of the revenue must be measurable.
- c. The revenue must be received in cash.
- d. The costs of generating the revenue can be determined.