The revenue recognition concept
A) is in not in conflict with the cash method of accounting
B) determines when revenue is credited to a revenue account
C) states that revenue is not recorded until the cash is received
D) controls all revenue reporting for the cash basis of accounting

Question

Quizplus · Accepted Answer

The revenue recognition concept determines when revenue is credited to a revenue account, independent of when cash is collected. This concept is important for accrual accounting and helps to ensure that revenue is recorded in the correct period, even if payment is received at a later time. Option A is incorrect as the revenue recognition concept is in conflict with the cash method of accounting. Option C is incorrect as the revenue recognition concept separates revenue from cash transactions. Option D is incorrect as the revenue recognition concept applies to accrual accounting, not cash basis accounting.

The Revenue Recognition Concept