The revenue recognition principle dictates that revenue be recognized in the accounting period
A) before it is earned.
B) after it is earned.
C) in which the performance obligation is satisfied.
D) in which it is collected.

Question

Quizplus · Accepted Answer

The revenue recognition principle states that revenue should be recognized in the accounting period in which the performance obligation is satisfied. This means that revenue should only be recognized when goods or services have been provided to the customer or when the customer has received a benefit, and not before or after. Choosing option A or D would be incorrect since revenue cannot be recognized before it is earned or before it is collected. Option B is incorrect because revenue should be recognized after it is earned, but only when the performance obligation has been satisfied.

The Revenue Recognition Principle Dictates That Revenue Be Recognized in the Accounting