In applying the revenue principle to a given transaction, the most important moment or period in time is when which of the following happens?
A) Related cash inﬂows occur.
B) Related expenses are incurred.
C) Sales transaction is completed (i.e., ownership passes) or services are rendered.
D) The service contract is signed regarding service to be performed.

Question

Quizplus · Accepted Answer

The revenue principle specifies that revenue should be recognized when it is earned, which typically occurs when a sales transaction is completed (i.e., ownership passes) or services are rendered, regardless of when cash is received.

In Applying the Revenue Principle to a Given Transaction, the Most