Asked by Preet Sangha on Jun 27, 2024
Verified
The question of when revenue should be recognized on the income statement (according to GAAP) is addressed by the:
A) Revenue recognition principle.
B) Going-concern assumption.
C) Objectivity principle.
D) Business entity assumption.
E) Cost principle.
Income Statement
A financial statement that reports a company's financial performance over a specific accounting period, detailing revenues, expenses, and net profit or loss.
- Acquire knowledge about the revenue recognition principle and its use in the preparation of financial reports.
Verified Answer
WT
William TyndallJul 04, 2024
Final Answer :
A
Explanation :
The revenue recognition principle governs when and how revenue should be recognized on the income statement according to GAAP. This principle states that revenue should be recognized when it is earned and measurable, and when collection is reasonably assured.
Learning Objectives
- Acquire knowledge about the revenue recognition principle and its use in the preparation of financial reports.