Which of the following correctly applies the revenue recognition principle?
A)Recognize revenue in December 2016 for products manufactured but not yet delivered to customers.
B)Recognize cash received in advance from customers as revenue when the product is not yet shipped.
C)Not recognize dividend revenue in 2016 until the cash is received in 2017.
D)Recognize revenue in December 2016 for products sold but not yet paid for in full.

Question

Quizplus · Accepted Answer

The revenue recognition principle requires revenue to be recognized when the earnings process is deemed to be complete, which generally occurs when the product or service has been provided to the customer. Therefore, recognizing revenue in December 2016 for products sold but not yet paid for in full is the correct application of the revenue recognition principle. The other choices do not correctly apply the principle.

Which of the Following Correctly Applies the Revenue Recognition Principle