Recognition in accounting means
A) recognizing the difference between assets and liabilities.
B) recognizing the difference between income and expenses.
C) recognizing that initially transactions are recorded at fair value.
D) the process of recording a transaction in the accounting records.

Question

Quizplus · Accepted Answer

Recognition in accounting refers to the process of recording a transaction in the accounting records, which means the event or transaction is recognized and recorded in the financial statements. Choice A refers to the distinction between assets and liabilities, which is related to the classification of items in the financial statements. Choice B refers to distinguishing between revenues (income) and expenses, which is also related to the classification of items in the financial statements. Finally, choice C refers to the initial valuation of items (assets, liabilities, etc.) at fair value, which is an important aspect of accounting but not directly relevant to recognition.

Recognition in Accounting Means