Question

Revenue is recognized when: A. A seller collect cash from a customer B. It has been...

Revenue is recognized when:

A. A seller collect cash from a customer
B. It has been earned and is realized or realizable
C. A company has satisfied its performance obligation to the customer
D. A company bills the customer for the goods that have been delivered or the services performed

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Answer #1

Solution

B. It has been earned and is realized or realizable

According to revenue recognition principle revenues are recognized when it has been actually earned whether cash has been received or not. It is considered as earned when the goods have been delivered to the customer or services have been rendered. c)      Revenue should be recognized only when either of the below mentioned two conditions are satisfied.

1.         When the consideration with regard to the work has been already received or

2.         When possession of the goods has been delivered to another person

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