In case of deferred revenue liabilities, when should revenues almost always be recorded as earned?
A) When the company receives an order for delivery of the product or the performance of a service
B) When the company is reasonably sure that the product can be developed and delivered
C) When the service is performed or the product is shipped
D) When the company receives cash for the service to be performed or the product to be delivered

Question

Quizplus · Accepted Answer

Revenues should almost always be recorded as earned when the service is performed or the product is shipped, as this is when the company has fulfilled its obligations and earned the right to recognize the revenue. Options A, B, and D are not necessarily indicative of when the company has earned the revenue.

In Case of Deferred Revenue Liabilities, When Should Revenues Almost