Revenue Recognition Principle: Revenue recognition principle means that one should record the revenue only after it is earned, merely contract does not mean that revenue is earned. For example, a trading company can record the revenue only after completing the sales process and in this process the last stage should be successfully completed that is delivery of goods to the purchaser then only the revenue will generate in books of accounts. To identify : The correct year to record the revenue. Answer: Option b: Revenue recognition principle is correct.

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Chapter 1, Problem 2MCQ

To determine

Revenue Recognition Principle: Revenue recognition principle means that one should record the revenue only after it is earned, merely contract does not mean that revenue is earned. For example, a trading company can record the revenue only after completing the sales process and in this process the last stage should be successfully completed that is delivery of goods to the purchaser then only the revenue will generate in books of accounts.

To identify: The correct year to record the revenue.

Answer:

Option b: Revenue recognition principle is correct.

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