A company that ships product to its customers in January 20B but records them as revenue in December 20A has not violated the revenue principle because they were manufactured and ready for sale before the accounting year end.

Question

Quizplus · Accepted Answer

The revenue principle states that revenue should be recorded when it is earned, not when the product is manufactured or ready for sale. Shipping in January 20B means the revenue should be recorded in 20B, not December 20A.

A Company That Ships Product to Its Customers in January