The revenue recognition concept
A) is not in conflict with the cash method of accounting
B) determines when revenue is credited to a revenue account
C) states that revenue is not recorded until the cash is received
D) controls all revenue reporting for the cash basis of accounting

Question

Quizplus · Accepted Answer

The revenue recognition concept determines when revenue is credited to a revenue account, based on when it is earned and realized or realizable. It is not dependent on the cash method of accounting, which does not necessarily correspond with revenue recognition. The revenue recognition concept also does not state that revenue is only recorded when cash is received, as there are other methods for recognizing revenue, such as accrual accounting.  Additionally, the revenue recognition concept does not control all revenue reporting for the cash basis of accounting, as there are different rules and principles applied in that method.

The Revenue Recognition Concept