The question of when revenue should be recognized on the income statement (according to GAAP) is addressed by the:
A)Revenue recognition principle
B)Going-concern principle
C)Objectivity principle
D)Business entity principle
E)Cost principle

Question

Quizplus · Accepted Answer

The revenue recognition principle outlines the criteria that must be met for revenue to be recognized on the income statement in accordance with GAAP. This principle states that revenue should be recognized when it is earned and realized or realizable, and when the company has substantially completed its obligations to the customer. This principle helps to ensure that companies do not overstate their revenue and provides consistency in financial reporting.

The Question of When Revenue Should Be Recognized on the Income