As a general rule, the greater the uncertainty involved with respect to a sales transaction, the longer one would delay revenue recognition.

Question

Quizplus · Accepted Answer

This statement is correct. According to the revenue recognition principle, revenue should only be recognized when it is earned and realized or realizable. Uncertainty in a sales transaction could arise due to various factors such as the collectibility of payment, product returns, warranty claims, etc. In such cases, delaying revenue recognition until the uncertainty is resolved would be appropriate.

As a General Rule, the Greater the Uncertainty Involved with Respect