If the contract is not in writing, revenue cannot be recognized, even though goods have been transferred and payment is expected to be received in exchange.

Question

Quizplus · Accepted Answer

Revenue recognition is not solely dependent on whether a contract is in writing. According to accounting principles, revenue can be recognized when the performance obligations under the contract are satisfied, which typically occurs when goods or services have been transferred to the customer and it is probable that the company will collect the payment.

If the Contract Is Not in Writing, Revenue Cannot Be