Which of the following must exist prior to the recognition of revenue by a company from the sale of a product?
A)Cash is realized on the sale of the product.
B)A price is discussed based upon the customer's resale of the product.
C)The customer is given the option to return the product at any time.
D)The product is transferred to the customer.

Question

Quizplus · Accepted Answer

Revenue can only be recognized once the ownership and risk of the product has been transferred to the customer. This is typically done by physically transferring the product to the customer, indicating that the customer now has control over the item. The other options listed do not necessarily have to exist prior to recognizing revenue.

Which of the Following Must Exist Prior to the Recognition