Question

Recognition guidance within a topic tells you:

a) whether the guidance in this topic applies to a transaction
b) how much (at what value) an item should be recorded
c) how a transaction should be presented in the financial statements
d) what, when, and how to record an item

Answer 1

Recognition guidance within a topic tells you what, when, and how to record an item. It ensures transactions are recorded accurately and in compliance with accounting principles.

Step-by-step explanation:

Recognition guidance within a topic tells you what, when, and how to record an item. It provides instructions on the proper recognition and recording of transactions in financial statements. This guidance ensures that transactions are recorded accurately and in compliance with accounting principles.

For example, recognition guidance may specify that a sale should be recorded when the revenue is realized and earned, not when the cash is received. It may also provide instructions on how to record non-cash transactions, such as the exchange of goods or services.