Revenues are normally considered to have been earned when:
A)all possibility of return has expired.
B)the company has substantially accomplished what it must to be entitled to the benefits.
C)the cash is collected.
D)goods have been shipped.

Question

Quizplus · Accepted Answer

Revenues are earned when the company has substantially accomplished what it must to be entitled to the benefits. This means that the company has fulfilled its performance obligations under the contract or agreement and is entitled to receive payment for the goods or services provided. The other options - all possibility of return has expired, cash is collected, and goods have been shipped - are not necessarily indicators of revenue earned. For example, returns may still be possible even after cash is collected or goods are shipped, and these would need to be accounted for separately.

Revenues Are Normally Considered to Have Been Earned When