Revenue is recognized when
A) It is collected in cash
B) Service is rendered
C) Service is rendered and collection is probable
D) The contract is signed
E) When the customer places the order

Question

Quizplus · Accepted Answer

Revenue should be recognized when the service is rendered and collection is probable, which means there is a high likelihood of payment. Collecting the payment in cash is not necessary to recognize revenue, as it can be recognized even if payment is made through other means such as credit or checks. Signing a contract or placing an order may be part of the agreement, but it is the actual rendering of the service and the likelihood of payment that determines when revenue can be recognized.

Revenue Is Recognized When