Question

In February of each year, the Ritz Hotel holds a very popular wine tasting. Tickets must be ordered and paid for in advance, and are typically sold out by November of the preceding year. The realization principle indicates that the revenue from these ticket sales should be recognized in the period in which the:

Answer 1

wine tasting is held

Step-by-step explanation:

Based on the realization principle the revenue from these ticket sales should be recognized in the period in which the wine tasting is held. That is because this principle states that revenue can only be recognized once the goods/services associated with the revenue have been delivered or rendered, respectively in such a way that the revenue was earned by the providers. Therefore, since the tickets are for attending a wine tasting, the revenue cannot be recognized until after the wine tasting has been held.