Revenue is properly recognized:
A)When the customer's order is received.
B)Only if the transaction creates an account receivable.
C)At the end of the accounting period.
D)Upon completion of the sale or when services have been performed and the business obtains the right to collect the sale price.
E)When cash from a sale is received.

Question

Quizplus · Accepted Answer

Revenue should be recognized when the sale or service is completed and the business obtains the right to collect the sale price. This is known as the accrual basis of accounting and is required by Generally Accepted Accounting Principles (GAAP). Recognition of revenue should not be solely based on when cash is received, as this would be considered cash basis accounting and is not in line with GAAP.

Revenue Is Properly Recognized