Revenue from a contract with a customer
A) is recognized even if the contract is wholly unperformed.
B) is recognized when the customer exercises its right to provide consideration.
C) cannot be recognized even if the performance obligation has been satisfied.
D) cannot be recognized until a contract exists.

Question

Quizplus · Accepted Answer

Revenue recognition requires that a contract exists between the parties. According to the revenue recognition principle, revenue is recognized when or as the entity satisfies a performance obligation by transferring a promised good or service to a customer. A contract must exist for any revenue recognition to occur, ensuring there is a formal agreement that defines the rights and obligations of each party.

Revenue from a Contract with a Customer