The rule that (1) requires revenue to be recognized at the time it is earned, (2) allows the inflow of assets associated with revenue to be in a form other than cash, and (3) measures the amount of revenue as the cash plus the cash equivalent value of any noncash assets received from customers in exchange for goods or services, is called the:
A) Measurement (Cost) principle.
B) Objectivity principle.
C) Business entity assumption.
D) Going-concern assumption.
E) Revenue recognition principle.

Question

Quizplus · Accepted Answer

The revenue recognition principle requires revenue to be recognized when earned, regardless of the form of payment received, and measures it as the cash plus cash equivalent of any noncash assets received as payment. This principle is important for ensuring accurate financial reporting and recording of revenue.

The Rule That (1) Requires Revenue to Be Recognized at the Time