Asked by Adrieanna Davis-Coco on Jun 03, 2024
Verified
To be recognized as revenue, an item must
A) meet the definition of earned revenue
B) be earned revenue and be realized or realizable
C) be realized
D) be earned
Earned Revenue
Income generated from business activities, recognized when goods are delivered or services are performed, regardless of payment timing.
Realized
Pertaining to gains or losses that have occurred and have been completed through the sale or other disposition of an asset.
Realizable
Pertaining to assets, it refers to the amount of money that can be received from their sale or disposal under normal circumstances.
- Grasp the conditions necessary for revenue recognition.
Verified Answer
WI
Wanaag Islamic ChannelJun 07, 2024
Final Answer :
B
Explanation :
Revenue must be both earned (meaning goods or services have been provided) and realized or realizable (meaning payment or promise of payment has been received or is expected). Option A is partially correct, but it does not include the condition of realization or realizability, which is also necessary for revenue recognition. Option C is incorrect, as realization alone is not sufficient for recognition of revenue. Option D is also incorrect, as earning revenue is necessary but not sufficient for its recognition.
Learning Objectives
- Grasp the conditions necessary for revenue recognition.