Explanation Justification for the correct answer: Revenue recognition principle Revenue recognition principle requires that every business organization should recognize the revenue only when it is earned, no matter, whether cash related to that obligation is received or not. b. Revenue recognition principle requires that the revenue to be recorded only after the business has earned it. Justification for the wrong answer: “Option a” is an incorrect answer, since this principle does not requires time to be divided into annual periods to calculate the amount of revenue properly...

Financial Accounting, Student Value Edition (4th Edition)

4th Edition

ISBN: 9780134114811

Author: Robert Kemp, Jeffrey Waybright

Publisher: PEARSON

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Financial Accounting, Student Value Edition (4th Edition)

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Identify that the revenue recognition principle states from the given choices.

Solution Summary: The author explains that the revenue recognition principle states from the given choices. Option ‘b’ record revenue only after you have earned it is the correct answer.

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Chapter 3 Solutions