Which of the following is not a proper application of the revenue realization principle?
A) Recording the sale of merchandise on credit as sales revenue.
B) Recording rent received in advance as unearned rent revenue.
C)Recording interest revenue when cash is collected rather than when earned.
D)Reducing the unearned service revenue account for service revenue performed at the end of the accounting perioD.Revenue is recorded when earned, not upon the collection of cash.

Question

Quizplus · Accepted Answer

The revenue realization principle states that revenue should be recognized and recorded when it is earned, not when cash is collected. Therefore, recording interest revenue only when cash is collected rather than when earned violates this principle. A, B, and D are all proper applications of the revenue realization principle as they involve recording revenue when it is earned or received in advance, and adjusting for revenue earned but not yet recognized.

Which of the Following Is Not a Proper Application of the Revenue