To be recognized as revenue, an item must
A)meet the definition of earned revenue
B)be earned revenue and be realized or realizable
C)be realized
D)be earned

Question

Quizplus · Accepted Answer

Revenue must be both earned (meaning goods or services have been provided) and realized or realizable (meaning payment or promise of payment has been received or is expected). Option A is partially correct, but it does not include the condition of realization or realizability, which is also necessary for revenue recognition. Option C is incorrect, as realization alone is not sufficient for recognition of revenue. Option D is also incorrect, as earning revenue is necessary but not sufficient for its recognition.

To Be Recognized as Revenue, an Item Must