Revenue should be recognized when
A) cash is received
B) the service is performed
C) the customer places an order
D) the customer charges an order

Question

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Revenue should be recognized when the service is performed, which means when the company has fulfilled its obligations to the customer and earned the right to receive payment. This is in accordance with the revenue recognition principle in accounting, which states that revenue should be recognized when earned, regardless of when payment is received. Options A, C, and D are all events that precede or follow revenue recognition, and are not indicative of when revenue should be recognized.

Revenue Should Be Recognized When