In applying the revenue principle to a given transaction, the most important moment or period in time is when which of the following happens?
A) sales transaction is completed (i.e., ownership passes) or services are rendered.
B) related cash inflows occur.
C) the service contract is signed regarding service to be performed.
D) related expenses are incurred.

Question

Quizplus · Accepted Answer

The most important moment in time when applying the revenue principle is when the sales transaction is completed (i.e., ownership passes) or services are rendered. This is because revenue cannot be recognized until the goods or services have been delivered to the customer. Related cash inflows, service contracts, and expenses are important considerations, but they do not have the same impact on revenue recognition as the completion of the sales transaction or the delivery of services.

In Applying the Revenue Principle to a Given Transaction, the Most