The revenue recognition principle:
A)Prescribes that accounting information is based on actual cost.
B)Provides guidance on when a company must recognize revenue.
C)Prescribes that a company report the details behind financial statements that would impact users' decisions.
D)Prescribes that a company record the expenses it incurred to generate the revenue reported.
E)Means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold.

Question

Quizplus · Accepted Answer

The revenue recognition principle provides guidance on when a company must recognize revenue, meaning when it should be recorded in the financial statements. It helps ensure that revenue is reported in the proper period, which is important for accurate financial reporting.

The Revenue Recognition Principle