Which one of the following is violated when a department store records revenue for gift certificates sold to customers that are not expected to be redeemed until next year?
A)Matching
B)Revenue recognition criteria
C)Going concern
D)Expense versus revenue concept

Question

Quizplus · Accepted Answer

The revenue recognition criteria requires that revenue should be recognized when it is earned, not when cash is received. In this case, the department store cannot recognize revenue for gift certificates until they are redeemed by the customers, as they have not yet earned the revenue. Recording revenue for gift certificates that are not expected to be redeemed until next year violates the revenue recognition criteria.

Which One of the Following Is Violated When a Department