Which of the following is the primary criterion for revenue recognition applied in practice?
A)Cash collection
B)Completion of the production process
C)Completion of the earnings process
D)When sales price is measurable

Question

Quizplus · Accepted Answer

The primary criterion for revenue recognition applied in practice is the completion of the earnings process, which means that the revenue is recognized when the seller's obligations to provide goods or services to the buyer are fulfilled, and the buyer has assumed the risks and rewards of ownership. This criterion is consistent with the principles-based approach of the current revenue recognition standard (ASC 606) and reflects the notion that revenue should be recognized when it is earned, not when cash is received or when production is completed.

Which of the Following Is the Primary Criterion for Revenue