Generally, revenue from sales should be recognized at a point when
A) management decides it is appropriate to do so.
B) the product is available for sale to the ultimate consumer.
C) the entire amount receivable has been collected from the customer and there remains no further warranty liability.
D) None of these answer choices are correct.

Question

Quizplus · Accepted Answer

Revenue recognition typically occurs when the earnings process is complete or virtually complete, and there is reasonable assurance about the collectability of the asset to be received (usually cash). The options provided do not accurately reflect the principles of revenue recognition as outlined in accounting standards, such as the International Financial Reporting Standards (IFRS) or Generally Accepted Accounting Principles (GAAP), which focus on the transfer of control and risks and rewards of ownership, rather than the conditions described in the options.

Generally, Revenue from Sales Should Be Recognized at a Point