In the sales and collection cycle when is, generally, the earliest point at which revenue can be recognized?
A) sales approval
B) credit approval
C) cash collection
D) shipment of goods

Question

Quizplus · Accepted Answer

The earliest point at which revenue can be recognized in the sales and collection cycle is typically when the goods are shipped, as this is when the seller has fulfilled their obligation to the customer and earned the right to recognize revenue. Sales approval (A) may indicate management's intent to sell, but it does not necessarily mean a transaction has occurred. Credit approval (B) is only relevant for credit sales, and does not impact the timing of revenue recognition for cash sales. Cash collection (C) indicates that payment has been received, but it does not necessarily mean that the goods have been shipped, so it is not the earliest point at which revenue can be recognized.

In the Sales and Collection Cycle When Is, Generally, the Earliest