The rule that (1) requires revenue to be recognized at the time it is earned, (2) allows the inflow of assets associated with revenue to be in a form other than cash, and (3) measures the amount of revenue as the cash plus the cash equivalent value of any noncash assets received from customers in exchange for goods or services, is called the:
A) Going-concern assumption.
B) Cost principle.
C) Revenue recognition principle.
D) Objectivity principle.
E) Business entity assumption.

Question

Quizplus · Accepted Answer

The rule that requires revenue to be recognized at the time it is earned and measures the amount of revenue based on the cash and noncash assets received is the revenue recognition principle. Options A, B, D, and E are all accounting principles, but they do not relate specifically to revenue recognition.

The Rule That (1) Requires Revenue to Be Recognized at the Time