Identify the recognition criteria that must be satisfied under the Conceptual Framework for income to be included in the profit report.
A) probability that the inflow of resources has occurred
B) inflow of resources able to be reliably measured
C) income must be matched with expenses
D) both A and B

Question

Quizplus · Accepted Answer

According to the Conceptual Framework for Financial Reporting, income should be recognized in the profit report if it meets the following criteria:
1) It is probable that economic benefits will flow to the entity.
2) The amount of revenue can be reliably measured.
Both of these criteria must be satisfied for income to be included in the profit report. Option D includes both of these criteria, making it the correct choice. Option C is incorrect as it refers to the matching principle, which is a concept related to the recognition of expenses and not income.

Identify the Recognition Criteria That Must Be Satisfied Under the Conceptual