Which option below best explains the concept of premature revenue recognition?
A) adjusting sales returns to increase sales
B) sales from the next period are recorded in the current period
C) sales from the previous period are recorded in the current period
D) cut-off errors

Question

Quizplus · Accepted Answer

Premature revenue recognition occurs when revenue is recorded before it is actually earned, which is accurately described by sales from the next period being recorded in the current period. This can artificially inflate a company's financial performance for the current period.

Which Option Below Best Explains the Concept of Premature Revenue