Why do generally accepted accounting principles require the application of the revenue recognition principle?
A)Failure to apply the revenue recognition principle could lead to a misstatement of revenue.
B)It is easy to apply the revenue recognition principle because revenue issues are always easy to identify and resolve.
C)Recording revenue when cash is received is an objective application of the revenue recognition principle.
D)Accounting software has made the revenue recognition easy to apply.

Question

Quizplus · Accepted Answer

Failure to apply the revenue recognition principle could lead to a misstatement of revenue, as it ensures that revenue is recorded when it is earned, not necessarily when cash is received.

Why Do Generally Accepted Accounting Principles Require the Application of the Revenue