In case of deferred revenue liabilities,revenues should almost always be recorded as earned when:
A)the company receives an order for delivery of the product or the performance of a service.
B)the company is reasonably sure that the product can be developed and delivered.
C)the service is performed or the product is shipped.
D)the company receives cash for the service to be performed or the product to be delivered.

Question

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Deferred revenue liabilities arise when a company receives payment from a customer before providing the product or service. In such cases, revenues should be recorded as earned only when the service is performed or the product is shipped. This is because until then, the company has an obligation to provide the product/service, and the payment received is considered a liability on the balance sheet. Option A is not a sufficient condition for recognizing revenue as earned, as an order may be cancelled or delayed. Option B is also not a valid criterion, as simply having the ability to develop and deliver a product does not mean that revenue can be recognized. Option D is incorrect as cash receipt does not determine revenue recognition; it is possible to receive cash in advance for a service that has yet to be performed or a product yet to be shipped.

In Case of Deferred Revenue Liabilities,revenues Should Almost Always Be