The rule for recognizing revenues in generally accepted accounting principles is that
A) Revenues should be recognized when earned, even if the amount that can be realized is not predictable at that time
B) Revenues should be recognized when cash is received, even if they are not yet earned
C) Revenues should be recognized when an earnings process is substantially complete, and the revenue is either realized or realizable
D) Management may choose between recognizing revenues when earned or when cash is received

Question

Quizplus · Accepted Answer

According to generally accepted accounting principles, revenues should be recognized when an earnings process is substantially complete and the revenue is either realized or realizable. This means that the revenue must have been earned through the delivery of goods or services, and the amount can be reliably estimated and collected. This method ensures that revenue is recognized in a timely and accurate manner, and provides useful information to stakeholders about the financial performance of the company. Options A and B are incorrect because they do not take into account when the earnings process is complete, and option D is incorrect because management does not have the option to choose when to recognize revenue.

The Rule for Recognizing Revenues in Generally Accepted Accounting Principles